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


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

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.

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 ~~July 29, 2022,~~April 28, 2023, the registrant had ~~53,389,687~~57,172,042 shares of common stock, $0.001 par value per share, outstanding.

~~Table of Contents~~

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking ~~statements.~~statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to substantial risks and uncertainties. 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,” “will,”~~, “would”,~~ “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 fact 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,~~macroeconomic conditions, 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”).

PART I—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)

June 30,
2022

December 31,
2021

Assets

Current assets

Cash and cash equivalents

$
79,724

$
92,752

Short-term investments in debt securities

250,772

83,348

Accounts receivable, net

49,171

42,351

Inventories, net

26,674

21,053

Prepaid expenses and other current assets

4,997

5,694

Total current assets

411,338

245,198

Property and equipment, net

20,076

16,471

Operating lease right-of-use assets

46,653

44,909

Deposits and other assets

6,195

981

Long-term investments in debt securities

0

3,983

Total assets

$
484,262

$
311,542

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable

$
4,748

$
6,541

Payroll-related accruals

27,695

24,433

Accrued expenses and other current liabilities

8,076

10,737

Operating lease liabilities, current portion

465

802

Total current liabilities

40,984

42,513

Operating lease liabilities, noncurrent portion

28,196

28,404

Other long-term liability

1,304

1,416

Total liabilities

70,484

72,333

Commitments and contingencies (Note 7)

Stockholders' equity

Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 shares
   issued and outstanding as of June 30, 2022 and December 31, 2021

0

0

Common stock, $0.001 par value, 300,000,000 shares
   authorized as of June 30, 2022 and December 31, 2021; 53,305,825
   and 50,313,452 shares issued and outstanding as of June 30, 2022 and
   December 31, 2021, respectively

53

50

Additional paid in capital

445,807

257,144

Accumulated other comprehensive loss

(1,183
)

(402
)
Accumulated deficit

(30,899
)

(17,583
)
Total stockholders' equity

413,778

239,209

Total liabilities and stockholders' equity

$
484,262

$
311,542


	March 31, 2023		December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	56,562	$	60,222
Short-term investments in debt securities	271,884		266,179
Accounts receivable, net	55,719		58,611
Inventories, net	36,499		32,581
Prepaid expenses and other current assets	4,942		5,312
Total current assets	425,606		422,905
Property and equipment, net	21,245		21,655
Operating lease right-of-use assets	50,599		50,703
Deposits and other assets	9,084		8,889

Total assets	$	506,534	$	504,152
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	7,352	$	7,659
Payroll-related accruals	28,443		38,955
Accrued expenses and other current liabilities	11,018		8,249
Operating lease liabilities, current portion	1,527		1,311
Total current liabilities	48,340		56,174
Operating lease liabilities, noncurrent portion	31,458		30,976

Total liabilities	79,798		87,150
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 March 31, 2023 and December 31, 2022	—		—
Common stock, $0.001 par value, 300,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 57,083,716 and 54,021,656 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	57		54
Additional paid in capital	475,754		462,949
Accumulated other comprehensive (loss) income	(7)		849
Accumulated deficit	(49,068)		(46,850)
Total stockholders' equity	426,736		417,002
Total liabilities and stockholders' equity	$	506,534	$	504,152

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

Table of Contents

~~Inari Medical, Inc.~~

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except share and per share data)

(unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Revenue

$
92,744

$
63,453

$
179,496

$
120,850

Cost of goods sold

10,347

4,814

20,314

9,437

Gross profit

82,397

58,639

159,182

111,413

Operating expenses

Research and development

18,569

11,630

34,704

19,793

Selling, general and administrative

73,156

42,897

136,888

79,795

Total operating expenses

91,725

54,527

171,592

99,588

(Loss) income from operations

(9,328
)

4,112

(12,410
)

11,825

Other income (expense)

Interest income

214

35

264

103

Interest expense

(73
)

(74
)

(146
)

(147
)
Other income (expense)

252

7

228

(34
)
Total other income (expenses)

393

(32
)

346

(78
)
(Loss) income before income taxes

(8,935
)

4,080

(12,064
)

11,747

Provision for income taxes

1,252

12

1,252

210

Net (loss) income

$
(10,187
)

$
4,068

$
(13,316
)

$
11,537

Other comprehensive income (loss)

Foreign currency translation adjustments

(291
)

57

(408
)

(123
)
Unrealized (loss) gain on available-for-sale debt securities

(125
)

(6
)

(373
)

12

Total other comprehensive (loss) income

(416
)

51

(781
)

(111
)
Comprehensive (loss) income

$
(10,603
)

$
4,119

$
(14,097
)

$
11,426

Net (loss) income per share

Basic

$
(0.19
)

$
0.08

$
(0.26
)

$
0.23

Diluted

$
(0.19
)

$
0.07

$
(0.26
)

$
0.21

Weighted average common shares used to compute net
(loss) income per share

Basic

53,183,767

49,669,652

52,075,399

49,512,800

Diluted

53,183,767

55,595,016

52,075,399

55,665,193


	Three Months Ended March 31,
	2023		2022

Revenue	$	116,167	$	86,752
Cost of goods sold	13,741		9,967
Gross profit	102,426		76,785
Operating expenses
Research and development	22,064		16,135
Selling, general and administrative	85,700		63,732
Total operating expenses	107,764		79,867
Loss from operations	(5,338)		(3,082)
Other income (expense)
Interest income	4,145		50
Interest expense	(40)		(73)
Other income (expense)	39		(24)
Total other income (expense)	4,144		(47)
Loss before income taxes	(1,194)		(3,129)
Provision for income taxes	1,024		—
Net loss	$	(2,218)	$	(3,129)
Other comprehensive income (loss)
Foreign currency translation adjustments	9		(117)
Unrealized loss on available-for-sale debt securities	(865)		(248)
Total other comprehensive loss	(856)		(365)
Comprehensive loss	$	(3,074)	$	(3,494)
Net loss per share
Basic	$	(0.04)	$	(0.06)
Diluted	$	(0.04)	$	(0.06)
Weighted average common shares used to compute net loss per share
Basic	54,756,024		50,954,715
Diluted	54,756,024		50,954,715

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

Table of Contents

~~Inari Medical, Inc.~~

Condensed Consolidated Statements Stockholders’ Equity

(in thousands, except share data)

(unaudited)

Common Stock

Additional Paid In

Accumulated Other Comprehensive

Accumulated

Total
Stockholders'

Shares

Amount

Capital

Income (Loss)

Deficit

Equity

Balance, December 31, 2021

50,313,452

$
50

$
257,144

$
(402
)

$
(17,583
)

$
239,209

Options exercised for
  common stock

322,882

1

344

—

—

345

Shares issued under Employee
  Stock Purchase Plan

54,808

—

3,427

—

—

3,427

Issuance of common stock upon
  vesting of restricted stock units,
  net of shares withheld for taxes

31,763

—

(1,624
)

—

—

(1,624
)
Issuance of common stock in
  public offering, net of
  issuance costs of $11.9 million

2,300,000

2

174,392

—

—

174,394

Share-based compensation
  expense

—

—

6,555

—

—

6,555

Other comprehensive loss

—

—

—

(365
)

—

(365
)
Net loss

—

—

—

—

(3,129
)

(3,129
)
Balance, March 31, 2022

53,022,905

53

440,238

(767
)

(20,712
)

418,812

Options exercised for
  common stock

228,313

—

156

0

0

156

Issuance of common stock upon
  vesting of restricted stock units,
  net of shares withheld for taxes

54,607

—

(1,751
)

—

—

(1,751
)
Share-based compensation
  expense

—

—

7,164

—

—

7,164

Other comprehensive loss

—

—

—

(416
)

—

(416
)
Net loss

—

—

—

—

(10,187
)

(10,187
)
Balance, June 30, 2022

53,305,825

$
53

$
445,807

$
(1,183
)

$
(30,899
)

$
413,778

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

Shares issued 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
  expense

—

—

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 expense

—

—

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


	Common Stock			Additional Paid In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance, December 31, 2022	54,021,656	$	54	$	462,949	$	849	$	(46,850)	$	417,002
Options exercised for common stock	209,966	—		226		—		—		226
Shares issued under Employee Stock Purchase Plan	86,051	—		4,172		—		—		4,172
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for taxes	2,766,043	3		(1,932)		—		—		(1,929)

Share-based compensation expense	—	—		10,339		—		—		10,339
Other comprehensive loss	—	—		—		(856)		—		(856)
Net loss	—	—		—		—		(2,218)		(2,218)
Balance, March 31, 2023	57,083,716	$	57	$	475,754	$	(7)	$	(49,068)	$	426,736

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

Table of Contents

~~Inari Medical, Inc.~~

Condensed Consolidated Statements ~~of Cash Flows~~

Stockholders’ Equity

(in ~~thousands)~~

thousands, except share data)

(unaudited)

Six Months Ended June 30,

2022

2021

Cash flows from operating activities

Net (loss) income

$
(13,316
)

$
11,537

Adjustments to reconcile net (loss) income to net cash (used in) provided by
operating activities:

Depreciation

2,260

1,288

Amortization of deferred financing costs

72

76

Amortization of right-of-use assets

1,225

357

Share-based compensation expense

13,719

8,440

Allowance for credit losses, net

66

(22
)
Changes in:

Accounts receivable

(6,960
)

(3,470
)
Inventories

(5,676
)

(7,523
)
Prepaid expenses, deposits and other assets

1,072

(11,306
)
Accounts payable

(1,760
)

7,276

Payroll-related accruals, accrued expenses and other liabilities

650

9,796

Operating lease liabilities

(544
)

(381
)
Lease prepayments for lessor's owned leasehold improvements

(2,969
)

0

Net cash (used in) provided by operating activities

(12,161
)

16,068

Cash flows from investing activities

Purchases of property and equipment

(5,864
)

(6,186
)
Purchases of marketable securities

(230,814
)

(84,751
)
Maturities of marketable securities

67,000

50,000

Purchases of other investments

(5,693
)

0

Net cash used in investing activities

(175,371
)

(40,937
)
Cash flows from financing activities

Proceeds from issuance of common stock in public offering, net of
issuance costs of $11.9 million

174,394

0

Proceeds from issuance of common stock under employee stock purchase plan

3,427

1,882

Proceeds from exercise of stock options

501

573

Payment of taxes related to vested restricted stock units

(3,375
)

(755
)
Net cash provided by financing activities

174,947

1,700

Effect of foreign exchange rate on cash and cash equivalents

(443
)

(126
)
Net decrease in cash

(13,028
)

(23,295
)
Cash and cash equivalents beginning of period

92,752

114,617

Cash and cash equivalents end of period

$
79,724

$
91,322

Supplemental disclosures of cash flow information:

Cash paid for income taxes

$
2,297

$
158

Cash paid for interest

$
75

$
76


	Common Stock			Additional Paid In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance, December 31, 2021	50,313,452	$	50	$	257,144	$	(402)	$	(17,583)	$	239,209
Options exercised for common stock	322,882	1		344		—		—		345
Shares issued under Employee Stock Purchase Plan	54,808	—		3,427		—		—		3,427
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for taxes	31,763	—		(1,624)		—		—		(1,624)
Issuance of common stock in public offering, net of issuance costs of $11.9 million	2,300,000	2		174,392						174,394
Share-based compensation expense	—	—		6,555		—		—		6,555
Other comprehensive loss	—	—		—		(365)		—		(365)
Net loss	—	—		—		—		(3,129)		(3,129)
Balance, March 31, 2022	53,022,905	$	53	$	440,238	$	(767)	$	(20,712)	$	418,812

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

Condensed Consolidated Statements of Cash Flows


	Three Months Ended March 31,
	2023		2022
Cash flows from operating activities
Net loss	$	(2,218)	$	(3,129)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation	1,348		1,063
Amortization of deferred financing costs	8		36
Amortization of right-of-use assets	1,625		604
Share-based compensation expense	10,339		6,555
Allowance for credit losses, net	91		79
Loss on disposal of fixed assets	26		—
Amortization of premium and discount on marketable securities	(3,810)		—
Changes in:
Accounts receivable	2,827		(2,695)
Inventories	(3,825)		(2,788)
Prepaid expenses, deposits and other assets	504		261
Accounts payable	(317)		(467)
Payroll-related accruals, accrued expenses and other liabilities	(7,787)		(6,247)
Operating lease liabilities	(366)		(2,097)
Lease prepayments for lessor's owned leasehold improvements	(458)		(275)
Net cash used in operating activities	(2,013)		(9,100)
Cash flows from investing activities
Purchases of property and equipment	(964)		(2,745)
Purchases of marketable securities	(122,054)		(112,073)
Maturities of marketable securities	119,300		47,000
Purchases of other investments	(325)		(5,693)
Net cash used in investing activities	(4,043)		(73,511)
Cash flows from financing activities
Proceeds from issuance of common stock in public offering, net of issuance costs of $11.9 million	—		174,394
Proceeds from issuance of common stock under employee stock purchase plan	4,172		3,427
Proceeds from exercise of stock options	226		345
Payment of taxes related to vested restricted stock units	(1,932)		(1,624)
Net cash provided by financing activities	2,466		176,542
Effect of foreign exchange rate on cash and cash equivalents	(70)		(127)
Net (decrease) increase in cash and cash equivalents	(3,660)		93,804
Cash and cash equivalents beginning of period	60,222		92,752
Cash and cash equivalents end of period	$	56,562	$	186,556

Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	104	$	89
Cash paid for interest	$	32	$	37
Noncash investing and financing:
Lease liabilities arising from obtaining new right-of-use assets	$	1,030	$	—

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

6Table of Contents

~~Inari Medical, Inc.~~

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

1. ~~Organization~~

ORGANIZATION

Description of Business

Inari Medical, Inc. (the “Company”) was incorporated in Delaware in July 2011 and is headquartered in Irvine, California. The Company ~~develops, manufactures, markets and sells devices~~purpose builds minimally invasive, novel, catheter-based mechanical thrombectomy systems for the ~~interventional treatment~~unique characteristics of ~~venous diseases.~~

specific disease states.

2. ~~Summary of Significant Accounting Policies~~

~~COVID-19~~

The global healthcare system continues to face an unprecedented challenge as a result of the novel coronavirus, or COVID-19, situation and its impact. COVID-19 is having, and may continue to have, an adverse impact on significant aspects of the Company and the business, including the demand for products, business operations, and the ability to research and develop and bring to market new products and services. To the extent individuals and hospital systems de-prioritize, delay or cancel deferrable medical procedures as a result of COVID-19, staffing or resource issues, or otherwise, the Company’s business, cash flows, financial condition and results of operations may continue to be negatively affected.

The Company continues to focus its efforts on the health and safety of patients, healthcare providers and employees, while executing its mission of transforming lives of venous thromboembolism ("VTE") patients. However, the Company expects the COVID-19 pandemic may continue to negatively impact 2022 performance.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles ~~generally accepted~~ in the United States of America (“U.S. GAAP”).

and include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The interim condensed consolidated balance sheet as of ~~June 30, 2022,~~March 31, 2023, the condensed consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s condensed consolidated financial position as of ~~June 30, 2022~~March 31, 2023 and its consolidated results of operations and cash flows for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021.~~2022. The financial data and the other financial information disclosed in the notes to the condensed consolidated financial statements related to the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ are also unaudited. The condensed consolidated results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future annual or interim period. The ~~condensed~~ consolidated balance sheet as of December 31, ~~2021~~2022 included herein was derived from the audited consolidated financial statements as of that date. These interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 filed on February ~~23, 2022.~~

27, 2023.

~~Principles of Consolidation~~

~~The condensed consolidated financial statements include the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.~~

Management Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements may include, but are not limited to, collectability of receivables, recoverability of long-lived assets, valuation of inventory, operating lease right-of-use (“ROU”) assets and liabilities, other investments, fair value of stock options, recoverability of net deferred tax assets and related valuation allowance, and certain accruals. Estimates are based on historical experience and on various assumptions that the Company believes are reasonable under current circumstances. Actual results could differ materially from those estimates. Management periodically evaluates such estimates and assumptions, and they are adjusted prospectively based upon such periodic evaluation.

Revenue Recognition

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to

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INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company sells its products primarily to hospitals in the United States utilizing the Company’s direct sales force. The Company recognizes revenue for arrangements where the Company has satisfied its performance obligation of shipping or delivering the product. For sales where the Company’s sales representative hand-deliver products directly to the hospitals, control of the products transfers to the customers upon such hand delivery. For sales where products are shipped, control of the products transfers either upon shipment or delivery of the products to the customer, depending on the shipping terms and conditions. Revenue from product sales is comprised of product revenue, net of product returns, administrative fees and sales rebates.

Performance Obligation—The Company has revenue arrangements that consist of a single performance obligation, the shipping or delivery of the Company’s products. The satisfaction of this performance obligation occurs with the transfer of control of the Company’s product to its customers, either upon shipment or delivery of the product.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. The amount of revenue recognized is based on the transaction price, which represents the invoiced amount, net of administrative fees and sales rebates, where applicable. The Company provides a standard 30-day unconditional right of return period. The Company establishes estimated provisions for returns at the time of sale based on historical experience. Historically, the actual product returns have been immaterial to the Company’s consolidated financial statements.

As of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company recorded $~~764,000~~$876,000 and $~~448,000~~,$1,218,000, respectively, of unbilled receivables, which are included in accounts receivable, net, in the accompanying condensed consolidated balance sheets.

The Company disaggregates revenue by product. Revenue for ClotTriever and other systems and FlowTriever ~~products~~system as a percentage of total revenue ~~was derived~~is as follow:

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

ClotTriever

33
%

33
%

32
%

34
%
FlowTriever

67
%

67
%

68
%

66
%


	Three Months Ended March 31,
	2023		2022
ClotTriever and other systems	34	%	32	%
FlowTriever system	66	%	68	%

Revenue from the Company's products by geographic area, based on the location where title transfers, is as follows (in thousands):


	Three Months Ended March 31,
	2023		2022
United States	$	111,846	$	85,054
International	4,321		1,698
Total revenue	$	116,167	$	86,752

The Company offers payment terms to its customers of less than three months and these terms do not include a significant financing component. The Company excludes taxes assessed by governmental authorities on revenue-producing transactions from the measurement of the transaction price.

The Company offers its standard warranty to all customers. The Company does not sell any warranties on a standalone basis. The Company’s warranty provides that its products are free of material defects and conform to specifications, and includes an offer to repair, replace or refund the purchase price of defective products. This assurance does not constitute a service and is not considered a separate performance obligation. The Company estimates warranty liabilities at the time of revenue recognition and records it as a charge to cost of goods sold. The warranty liability as of March 31, 2023 and December 31, 2022 were not significant. The warranty expense recognized during the three months ended March 31, 2023 and 2022 were $409,000 and $113,000, respectively.

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INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Costs associated with product sales include commissions and are recorded in selling, general and administrative ("(“SG~~&A"~~&A”) expenses. The Company applies the practical expedient and recognizes commissions as an expense when incurred because the amortization period is less than one year.

~~Other~~

Equity Investments

~~In March 2022, the~~

The Company ~~made~~has strategic investments in certain privately held companies, with no readily determinable fair value. The Company measures these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investments. The Company will monitor the information that becomes available from time to time and adjust the carrying values of these investments if there are identified events or changes in circumstances that have a significant adverse effect on the fair values. As of ~~June 30,~~March 31, 2023 and December 31, 2022, total other investments of $~~5.7~~$8.6 million ~~was~~and $8.3 million, respectively, were included in deposits and other assets on the condensed consolidated balance sheets with no impairment identified.

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

3. ~~Fair Value Measurements~~

FAIR VALUE MEASUREMENTS

Investments in debt securities have been classified as available-for-sale and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. As of March 31, 2023, all of the Company's investments in debt securities had maturities less than 12 months and were classified as short-term investments on the condensed consolidated balance sheets.

The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (in thousands):


	March 31, 2023
	Level 1		Level 2		Level 3		Aggregate Fair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds	$	13,863	$	—	$	—	$	13,863


Total included in cash and cash equivalents	13,863		—		—		13,863
Investments:
U.S. Treasury securities	166,730		—		—		166,730
U.S. Government agencies	—		57,624		—		57,624
Corporate debt securities and commercial paper	—		47,530		—		47,530
Total included in short-term investments	166,730		105,154		—		271,884
Total assets	$	180,593	$	105,154	$	—	$	285,747

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June 30, 2022

Level 1

Level 2

Level 3

Aggregate Fair Value

Financial Assets

Cash and cash equivalents:

Money market mutual funds

$
11,041

$
0

$
0

$
11,041

U.S. Treasury securities

14,977

0

0

14,977

Corporate debt securities and commercial paper

0

5,992

0

5,992

Total included in cash and cash equivalents

26,018

5,992

0

32,010

Investments:

U.S. Treasury securities

185,491

0

0

185,491

U.S. Government agencies

0

16,004

0

16,004

Corporate debt securities and commercial paper

0

49,277

0

49,277

Total included in short-term investments

185,491

65,281

0

250,772

Total assets

$
211,509

$
71,273

$
0

$
282,782

December 31, 2021

Level 1

Level 2

Level 3

Aggregate Fair Value

Financial Assets

Cash and cash equivalents:

Money market mutual funds

$
48,595

$
0

$
0

$
48,595

Total included in cash and cash equivalents

48,595

0

0

48,595

Investments:

U.S. Treasury securities

44,322

0

0

44,322

Corporate debt securities and commercial paper

0

39,026

0

39,026

Total included in short-term investments

44,322

39,026

0

83,348

U.S. Treasury securities included in
long-term investments

3,983

0

0

3,983

Total assets

$
96,900

$
39,026

$
0

$
135,926

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements


	December 31, 2022
	Level 1		Level 2		Level 3		Aggregate Fair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds	$	20,329	$	—	$	—	$	20,329
Total included in cash and cash equivalents	20,329		—		—		20,329
Investments:
U.S. Treasury securities	172,088		—		—		172,088
U.S. Government agencies	—		47,131		—		47,131
Corporate debt securities and commercial paper	—		46,960		—		46,960
Total included in short-term investments	172,088		94,091		—		266,179

Total assets	$	192,417	$	94,091	$	—	$	286,508

There were 0no transfers between Levels 1, 2 or 3 for the periods presented.

4. ~~Cash Equivalents and Investments~~

CASH EQUIVALENTS AND INVESTMENTS

The following is a summary of the Company’s cash equivalents and investments in debt securities as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (in thousands):


	March 31, 2023
	Amortized Cost Basis		Unrealized Gain		Unrealized Loss		Fair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds	$	13,863	$	—	$	—	$	13,863


Total included in cash and cash equivalents	13,863		—		—		13,863
Investments:
U.S. Treasury securities	166,564		180		(14)		166,730
U.S. Government agencies	57,552		87		(15)		57,624
Corporate debt securities and commercial paper	47,502		41		(13)		47,530
Total included in short-term investments	271,618		308		(42)		271,884
Total assets	$	285,481	$	308	$	(42)	$	285,747

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~~Inari Medical, Inc.~~

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2022

Amortized Cost Basis

Unrealized Gain

Unrealized Loss

Fair Value

Financial Assets

Cash and cash equivalents:

Money market mutual funds

$
11,041

$
0

$
0

$
11,041

U.S. Treasury securities

14,968

9

0

14,977

Corporate debt securities and commercial paper

5,985

7

0

5,992

Total included in cash and cash equivalents

31,994

16

0

32,010

Investments:

U.S. Treasury securities

185,887

0

(396
)

185,491

U.S. Government agencies

16,012

0

(8
)

16,004

Corporate debt securities and commercial paper

49,282

0

(5
)

49,277

Total included in short-term investments

251,181

0

(409
)

250,772

Total assets

$
283,175

$
16

$
(409
)

$
282,782

December 31, 2021

Amortized Cost Basis

Unrealized Gain

Unrealized Loss

Fair Value

Financial Assets

Cash and cash equivalents:

Money market mutual funds

$
48,595

$
0

$
0

$
48,595

Total included in cash and cash equivalents

48,595

0

0

48,595

Investments:

U.S. Treasury securities

44,349

0

(27
)

44,322

Corporate debt securities and commercial paper

39,012

14

0

39,026

Total included in short-term investments

83,361

14

(27
)

83,348

U.S. Treasury securities included in
long-term investments

3,993

0

(10
)

3,983

Total assets

$
135,949

$
14

$
(37
)

$
135,926

December 31, 2022
Amortized Cost Basis Unrealized Gain Unrealized Loss Fair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds $ 20,329 $ — $ — $ 20,329
Total included in cash and cash equivalents 20,329 — — 20,329
Investments:
U.S. Treasury securities 171,006 1,120 (38) 172,088
U.S. Government agencies 46,777 354 — 47,131
Corporate debt securities and commercial paper 46,576 397 (13) 46,960
Total included in short-term investments 264,359 1,871 (51) 266,179
Total assets $ 284,688 $ 1,871 $ (51) $ 286,508

The Company regularly reviews the changes to the rating of its debt securities and reasonably monitors the surrounding economic conditions to assess the risk of expected credit losses. As of March 31, 2023, the risk of expected credit losses was not significant.

5. ~~Inventories, net~~INVENTORIES, NET

Inventories, net of reserves, ~~as of June 30, 2022 and December 31, 2021 totaling $391,000~~ ~~and $285,000, respectively,~~ consist of the following (in thousands):

June 30,
2022

December 31,
2021

Raw materials

$
8,695

$
5,763

Work-in-process

1,507

1,490

Finished goods

16,472

13,800

$
26,674

$
21,053


	March 31, 2023		December 31, 2022
Raw materials	$	14,139	$	13,943
Work-in-process	4,062		3,396
Finished goods	18,298		15,242
Total inventories, net	$	36,499	$	32,581

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

6. ~~Property and Equipment, net~~

PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following (in thousands):

June 30,
2022

December 31,
2021

Manufacturing equipment

$
9,300

$
7,408

Leasehold improvements

4,900

4,712

Assets in progress

4,519

3,124

Furniture and fixtures

3,719

3,044

Computer hardware

4,450

2,864

Computer software

100

100

Total property and equipment, gross

26,988

21,252

Accumulated depreciation

(6,912
)

(4,781
)
Total property and equipment, net

$
20,076

$
16,471


	March 31, 2023		December 31, 2022
Manufacturing equipment	$	14,365	$	13,585
Computer hardware	5,233		5,123
Leasehold improvements	5,210		5,040
Furniture and fixtures	4,124		4,119
Assets in progress	2,366		2,516
Computer software	100		100
Total property and equipment, gross	31,398		30,483
Accumulated depreciation	(10,153)		(8,828)
Total property and equipment, net	$	21,245	$	21,655

Depreciation expense of $~~970,000~~$1,094,000 and $~~522,000~~$857,000 was included in ~~SG&A~~operating expenses and $~~226,000~~$254,000 and $~~157,000~~$206,000 was included in cost of goods sold for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. ~~Depreciation expense~~

Table of $Contents~~1,827,000~~ ~~and $985,000~~ ~~was included in SG&A expenses and $433,000~~ ~~and $303,000~~ ~~was included in cost of goods sold for the six months ended June 30, 2022 and 2021, respectively.~~

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

7. ~~Commitments and Contingencies~~

COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company has operating leases for facilities and certain equipment. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. Lease expense for operating leases is recognized on a straight-line basis over the lease term. For lease agreements, other than long-term real estate leases, the Company combines lease and non-lease components.

~~In March 2019,~~ The operating leases for facilities expire at various dates through July 2041 and some contain renewal options, the ~~Company executed a~~ ~~five-year~~ ~~lease for a facility in Irvine, California, where substantially all operations~~longest of ~~the Company have been located since September 2019. The lease expires in~~ ~~September 2024~~ ~~and contains~~ 2 ~~optional extension periods of~~ ~~five years~~ each. In addition to the minimum future lease commitments presented below, the lease requires the Company to pay property taxes, insurance, maintenance, and repair costs, which are considered variable lease payments and not included in the lease liability. ~~The lease includes a~~ ~~one-month~~ ~~rent holiday concession and escalation clauses for increased rent over the lease term.~~ Concurrent with the execution of a new ten-year lease (see below), the Company entered into a termination agreement (as amended) that releases the Company from the current facility lease obligation 12 months following the commencement date of the new lease, with options to extend the lease term for up to three periods of an additional 30 days each. As of June 30, 2022, the operating lease right-of-use asset and liability were $~~52,000~~ ~~and $59,000, respectively, with the remaining lease term of~~ 1 ~~month.~~

~~In October 2020, the Company entered into a~~ ~~ten-year~~ ~~lease for a facility located in Irvine, California (the “Oak Canyon lease”) with~~ 2 ~~option extension periods of~~ ~~five years~~ ~~each, which the Company has determined that it's reasonably certain to exercise. The Oak Canyon lease requires the Company to make variable lease payments~~, which are not included in the lease liability due to the amounts not being fixed, for property taxes, insurance, maintenance, repair costs, and certain improvements deemed to be assets of the lessor. The Oak Canyon lease includes scheduled payment escalation clauses over the lease term. The Oak Canyon lease also requires the Company to maintain a letter of credit for the benefit of the landlord in the amount of $~~1.5~~ ~~million,~~ which is ~~secured by the Company’s Credit Agreement.~~for five years. The ~~Company has moved in and taken control of the facility and has determined the lease commencement date to be September 30, 2021. On the commencement date, the Company recorded approximately $42.2~~ ~~million and $28.6~~ ~~million of~~ right-of-use asset and lease liability ~~respectively. The right-of use-asset~~ includes ~~approximately $13.5~~ ~~million, net of $3.7~~ ~~million tenant allowance, related~~renewal options if the Company is reasonably certain to ~~prepaid lease payments for the lessor’s owned leasehold improvements which were reclassified from assets in progress and deposits and other assets. The operating right-of-use assets also include $5.8~~ ~~million of additional prepaid lease payments for the lessor's owned leasehold improvements paid subsequent to the commencement date.~~ exercise such renewal options.

As of ~~June 30, 2022,~~March 31, 2023, the aggregate operating lease ~~right-of-use~~ROU assets and lease liabilities were $~~46.5~~$50.6 million and $~~28.5~~$33.0 million, respectively, with the weighted average remaining lease term of ~~229~~ ~~months.~~

~~The Company's wholly owned subsidiary, Inari Medical Europe GmbH entered into a~~ ~~five-year~~ ~~commercial lease agreement for office space located in Basel, Switzerland (the "Basel lease"). The lease will be effective July 1, 2022 with an option to extend for a period of~~ ~~five years~~, which the Company has determined that it is reasonably certain to exercise. The lease payment is also indexed to the national consumer price index, which may be adjusted once per calendar year. The Basel lease will also require the Company to maintain a bank guarantee deposit for the benefit of the landlord in the amount of approximately $~~186,000~~.

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

18.9 years. As of ~~June 30,~~December 31, 2022, the aggregate operating lease ROU asset and lease liabilities were $50.7 million and $32.3 million, respectively, with the weighted average remaining lease term of 17.1 years.

As of March 31, 2023, the weighted average incremental borrowing rate used to measure operating lease liabilities was ~~6.1~~%6.05%. Cash paid for amounts included in the measurement of operating lease liabilities was $~~705,000~~$846,000 and $~~199,000~~$714,000 for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021 and $1,419,000~~ ~~and $398,000~~ ~~for the six months ended June 30, 2022 and 2021,~~ respectively.

Total lease ~~cost for the three and six months ended June 30, 2022,~~costs are as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Operating lease cost

$
1,057

$
186

$
2,100

$
371

Short-term lease cost

30

23

45

34

Variable lease cost

157

81

296

123

Total lease costs

$
1,244

$
290

$
2,441

$
528

Three Months Ended March 31,
2023 2022
Operating lease cost $ 1,180 $ 1,043
Short-term lease cost 22 15
Variable lease cost 166 139
Total lease costs $ 1,368 $ 1,197

Future minimum lease payments under operating leases liabilities as of ~~June 30, 2022~~March 31, 2023 are as follows (in thousands):

Year ending December 31:

Amount

Remainder of 2022

$
1,124

2023

2,163

2024

2,234

2025

2,295

2026

2,361

Thereafter

39,536

Total lease payments

49,713

Less imputed interest

(21,052
)
Total lease liabilities

28,661

Less: lease liabilities - current portion

(465
)
Lease liabilities - noncurrent portion

$
28,196

~~The following are future minimum lease payments owed for the Basel lease, which has not yet commenced as of June 30, 2022 (in thousands):~~


Year ending December 31:	Amount		Year ending December 31:	Amount
Remainder of 2022	$	90
2023		284
Remainder of 2023			Remainder of 2023	$	2,602
2024		293	2024	3,558
2025		300	2025	3,044
2026		308	2026	2,923
2027			2027	2,989
Thereafter		1,797	Thereafter	38,553
Total lease payments	$	3,072	Total lease payments	53,669
Less imputed interest			Less imputed interest	(20,684)
Total lease liabilities			Total lease liabilities	32,985
Less: lease liabilities - current portion			Less: lease liabilities - current portion	(1,527)
Lease liabilities - noncurrent portion			Lease liabilities - noncurrent portion	$	31,458

Indemnification

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and may provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future but have not yet been made. To date, the Company has not been subject to any claims or required to defend any action related to its indemnification obligations.

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INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

The Company’s amended and restated certificate of incorporation contains provisions limiting the liability of directors, and its amended and restated bylaws provide that the Company will indemnify each of its directors to the fullest extent permitted under Delaware law. The Company’s amended and restated certificate of incorporation and amended and restated bylaws also provide its board of directors with discretion to indemnify its officers and employees when determined appropriate by the board. In addition, the Company has entered and expects to continue to enter into agreements to indemnify its directors and executive officers.

Legal Proceedings

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

From time to time, the Company may become involved in legal proceedings arising out of the ordinary course of its business. Management is currently not aware of any matters that will have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.

Licensed Technology

In December 2021, the Company entered into an exclusive, perpetual, royalty free, technology license agreement for use in a particular research and development project that requires total payments of approximately $4.2 million payable in three installments due in 2022 and 2023. The Company accounted for the purchase as a research and development expense as it was determined to have no future alternative uses. As of March 31, 2023 and December 31, 2022, the outstanding balance was approximately $1.4 million and $1.3 million, respectively, which was included in accrued expenses and other current liabilities on the condensed consolidated balance sheets.

Sublicense Agreement

In August 2019, the Company entered into a sublicense agreement ofwith Inceptus Medical LLC (“Inceptus”), pursuant to which Inceptus granted to the Company a non-transferable, worldwide, exclusive sublicense to its licensed intellectual property rights related to the tubular braiding for the non-surgical removal of clots and treatment of embolism and thrombosis in human vasculature other than carotid arteries, coronary vasculature and cerebral vasculature.

Under the sublicense agreement, the Company is required to pay an ongoing quarterly administration fee, which amounted to $~~29,000~~$29,000 for the three months ended ~~June 30, 2022~~March 31, 2023 and ~~2021 and $58,000~~ ~~for the six months ended June 30, 2022 and 2021.~~2022. Additionally, the Company is obligated to pay an ongoing royalty ranging from 1%1% to ~~1.5~~%1.50% of the net sales of products utilizing the licensed intellectual property, subject to a minimum royalty quarterly fee of $~~1,000~~.$1,500. The Company recorded royalty expense to cost of goods sold of $0$1,500 and $~~195,000~~$212,000 for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $~~respectively.

Self-Insured Health Plan

~~212,000~~ ~~and $385,000~~ ~~for the six months ended June 30, 2022 and 2021, respectively.~~

~~Licensed Technology~~

~~In December 2021,~~

As of January 1, 2023, the Company ~~entered into an exclusive, perpetual, royalty free, technology license agreement (the “Licensed Technology”) for use in~~implemented a ~~particular research~~self-insurance program to cover employees and ~~development project that requires total payments~~their dependent health benefits, including medical, dental and vision. As part of ~~approximately $4.2~~ ~~million payable in three installments due in 2022 and 2023.~~the program, the Company also has stop-loss coverage from a third party which limits the exposure to large claims. The Company ~~accounted for~~records a liability associated with these benefits that includes an estimate of both claims filed and losses incurred but not yet reported based on historical claims experience. In estimating this accrual, the ~~purchase as~~Company utilizes an independent third-party broker to estimate a ~~research~~range of expected losses, which are based on analyses of historical data. The assumptions are closely monitored and ~~development~~adjusted when necessary by changing circumstances. If the liability generated from incurred claims exceeds the expense ~~in December 2021 as it was determined to have no future alternative uses.~~recorded, the Company may record an additional expense. As of ~~June 30, 2022,~~March 31, 2023, the ~~outstanding balance~~Company's self-insurance liability, inclusive of administrative fees, was ~~approximately $2.5~~$1.5 million, $~~1.2~~ ~~million of~~ which ~~was~~is included in accrued expenses and other current liabilities ~~and the remaining $1.3~~ ~~million was included in other long-term liability~~ on the condensed consolidated balance ~~sheets~~sheets.

Table of Contents.

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

8. ~~Concentrations~~

CONCENTRATIONS

The Company’s revenue is derived primarily from the sale of catheter-based therapeutic devices in the United States. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ there were 0no customers which accounted for more than 10% of the Company’s revenue. As of March 31, 2023 and December 31, 2022, there were no customers that accounted for more than 10~~% of the Company’s revenue. As of June 30, 2022 and December 31, 2021, there were~~ 0 ~~customers that accounted for more than~~ 10%10% of the Company’s accounts receivable.

~~NaN~~

No vendor accounted for more than 10%10% of the Company’s purchases for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021.~~2022. There was one vendor that accounted for 10.7% of the Company's accounts payable as of March 31, 2023. There were 0no vendors that accounted for more than 10%10% of the Company’s accounts payable as of ~~June 30, 2022 and~~ December 31, ~~2021.~~

2022.

In early 2023, a few U.S. banks were closed and the regulators appointed the Federal Deposit Insurance Corporation (“FDIC”) to act as receiver, which created significant market disruption and uncertainty with respect to the financial condition of the banking institutions in the U.S. While we do not have any direct exposure to these banks, we do maintain our cash and cash equivalents at multiple financial institutions, which exceed the current FDIC insurance limits. We will continue to monitor our cash and cash equivalents and take steps to identify any potential impact on our business.

9. ~~Related Party~~RELATED PARTY

The Company utilizes MRI The Hoffman Group (“MRI”), a recruiting services company owned by the brother of the former Chief Executive Officer and President and current member of the board of directors of the Company. The Company paid for recruiting services provided by MRI amounting to $~~118,000~~$30,000 and $~~129,000~~$74,000 for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021 and $192,000~~ ~~and $263,000~~ ~~for the six months ended June 30, 2022 and 2021,~~ respectively, which was included in ~~operating~~SG&A expenses on the condensed consolidated statements of ~~operations.~~operations and comprehensive income (loss). As of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, there was 0no balance payable to MRI.

10. ~~Debt~~

CREDIT FACILITY

Bank of America Credit Facility

~~In September 2020,~~

On December 16, 2022, the Company ~~entered into a~~amended its senior secured revolving credit facility with Bank of America (the ~~“Credit~~“Amended Credit Agreement”)~~, as amended,~~ under which the Company may borrow loans up to a maximum principal amount of $30$40.0 million and increases the optional accordion to $120.0 million. The Amended Credit Agreement matures on December 16, 2027. The amount available to borrow under the Amended Credit Agreement as of March 31, 2023 is approximately $38.0 million, comprised ofof: a) 85%90% of eligible accounts receivable, plus b) pledged cash (up to $10 million). ~~There was~~ 0 ~~principal amount outstanding and no cash was pledged~~

Advances under the ~~Credit Agreement as of June 30, 2022 and December 31, 2021, and the amount available to borrow under the Credit Agreement was approximately $28.2~~ ~~million.~~

~~Advances under the~~Amended Credit Agreement will bear interest at a base rate per annum (the “Base Rate”) plus an applicable margin (the “Margin”). The Base Rate equals the greater of (i) the Prime Rate, (ii) the Federal funds rate plus ~~0.50~~%0.50%, or (iii) the ~~LIBOR~~Bloomberg Short-Term Bank Yield Index ("BSBY") rate based upon an interest period of ~~30 days~~one month plus ~~1.00~~%1.00%. The Margin ranges from ~~1.00~~%0.50% to ~~1.50% based~~1.00% in the case of BSBY Rate loans depending on average daily availability, in each case with a floor of 0%. As a condition to entering into the ~~Company’s applicable fixed charge coverage ratio. Advances under the~~Amended Credit Agreement, ~~designated as “LIBOR Loans” will bear interest at~~the Company was obligated to pay a ~~rate per annum equal to the LIBOR rate plus the applicable Margin ranging from~~ ~~2.00% to~~ ~~2.50% based on the Company’s applicable fixed charge coverage ratio. Interest on loans outstanding under the Credit Agreement is payable~~ ~~monthly. Loan principal balances outstanding under the Credit Agreement are due at maturity in~~ ~~September 2023. The Company may prepay any loans under the Credit~~

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~Agreement at any time without any penalty or premium.~~nonrefundable fee of $10,000. The Company is also required to pay an unused line fee at an annual rate ~~ranging from~~ ~~0.25% to~~ ~~0.375~~%of 0.25% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Amended Credit Agreement.

The Amended Credit Agreement also includes a Letter of Credit subline facility (the “LC Facility”) of up to $5$5.0 million. In February 2023, the Company amended the LC Facility to increase the limit to up to $10.0 million. The aggregate stated amount outstanding of letter of credits reduces the total borrowing base available under the Amended Credit Agreement. The Company is required to pay the following fees under the LC Facility are as follows: (a) a fee equal to the applicable margin in effect for ~~LIBOR~~BSBY loans (currently ~~2.25~~%2.25%) times the average daily stated amount of outstanding letter of credits; (b) a fronting fee equal to ~~0.125~~%0.125% per annum on the stated

Table of Contents

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

amount of each letter of credit outstanding. As of ~~June 30, 2022 and December~~March 31, ~~2021,~~2023, the Company had 2three letters of credit in the aggregated amount of $~~1.8~~$2.0 million outstanding under the LC Facility.

The ~~Company paid Bank of America a closing fee of $150,000~~ ~~and incurred approximately $280,000~~ ~~in legal and other fees directly related to the Credit Agreement.~~ ~~The~~Amended Credit Agreement contains certain customary covenants subject to certain exceptions, including, among others, the following: a fixed charge coverage ratio covenant, and limitations of indebtedness, liens, investments, asset sales, mergers, consolidations, liquidations, dispositions, restricted payments, transactions with affiliates and prepayments of certain debt. The Amended Credit Agreement also contains certain events of default ~~including:~~subject to certain customary grace periods, including, among others, payment defaults, breaches of any representation, warranty or covenants, judgment defaults, cross defaults to certain other contracts, ~~certain events with respect to governmental approvals if such events could cause a~~bankruptcy and insolvency defaults, material adverse change, a material impairment in the perfection or priority of the lender's security interest or in the value of the collateral, a material adverse change in the business, operations, or condition of us or any of our subsidiaries,judgment defaults and a ~~material impairment~~change of control default.

As of March 31, 2023, there was no principal amount outstanding and no cash was pledged under the ~~prospect of repayment of the loans. Upon the occurrence of an event of default, a default increase in the interest rate of an additional~~ ~~2.0% could be applied to the outstanding loan balance~~Amended Credit Agreement, and the ~~lender could declare all outstanding obligations immediately due and payable and take such other actions as set forth in the loan and security agreement.~~ ~~The~~ Company was in compliance with its covenant ~~requirements as of June 30, 2022.~~requirement. Obligations under the Credit Agreement are secured by substantially all of the Company’s assets, excluding intellectual property.

~~Deferred Financing Costs~~

As of June 30, 2022 and December 31, 2021, costs incurred directly related to debt financings were included in deposits and other assets and are being amortized over the three-year life of the Credit Agreement on the straight-line basis as follows (in thousands):

June 30,
2022

December 31,
2021

Deferred financing costs

$
430

$
430

Accumulated amortization

(263
)

(191
)
Unamortized deferred financing costs

$
167

$
239

11. ~~Stockholder’s Equity~~STOCKHOLDER'S EQUITY

In March 2022, the Company completed an underwritten public offering (“Follow-On Offering”) of 2,300,000 shares of its common stock, including 300,000 shares sold pursuant to the underwriters’ exercise of their option to purchase additional shares, at a public offering price of $~~81.00~~$81.00 per share. The Company received net proceeds of approximately $~~174.4~~$174.4 million, after deducting underwriters’ discounts and commissions of $~~11.2~~$11.2 million and offering costs of $~~0.7~~$0.7 million.

12. ~~Equity Incentive Plans~~

EQUITY INCENTIVE PLANS

In 2011, the Company adopted the 2011 Equity Incentive Plan (the “2011 Plan”) to permit the grant of share-based awards, such as stock grants and incentives and non-qualified stock options to employees ~~directors, consultants~~ and ~~advisors.~~directors. The Board has the authority to determine to whom awards will be granted, the number of shares, the term and the exercise price.

In March 2020, the Company adopted the 2020 Incentive Award Plan (the “2020 Plan”), which became effective in connection with the IPO. As a result, the Company may not grant any additional awards under the 2011 Plan. The 2011 Plan will continue to govern outstanding equity awards granted thereunder. ~~The Company has initially reserved~~ ~~3,468,048~~ ~~shares of common stock for the issuance of a variety of awards under the 2020 Plan, including stock options, stock appreciation rights, awards of restricted stock and awards of restricted stock units.~~ In addition, the number of shares of common stock reserved for issuance under the 2020 Plan will automatically increase on the first day of January for a period of up to ten years,, commencing on January 1, 2021, in an amount equal to 3%3% of the total number of shares of the Company’s capital stock outstanding on the last day of the preceding year, or a lesser number of shares determined by the Company’s board of directors. As of ~~June 30, 2022,~~March 31, 2023, there were ~~5,753,764~~6,523,422 shares available for issuance under the 2020 Plan, including ~~1,509,404~~1,620,650 additional shares reserved effective January 1, ~~2022.~~

2023.

2011 Equity Incentive Plan

Restricted Stock Units

In March 2019, the Company granted, under the 2011 Plan, restricted stock unit awards (“RSUs”) to certain employees that vest only upon the satisfaction of both a time-based service condition and a performance-based condition that was satisfied on the effective date of the IPO of the Company’s common stock. The RSUs were subject to four-year cliff vesting and vested in full in March 2023. The vesting was also subject to a market-based condition related to the value of the Company’s common stock as of the vesting date. As a result of exceeding the value of the Company's common stock as set forth in the grant agreement, the maximum amount of RSUs were earned and vested.

Table of Contents

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

RSU activities under the 2011 Plan is set forth below:


	Number of Awards	Weighted Average Fair Value
Outstanding, December 31, 2022	2,712,674	$	0.17

Vested	(2,712,674)	(a)

Outstanding, March 31, 2023	—	$	—

(a)The vested RSUs will be distributed to the employees in installments. The first installment was distributed in the quarter ended March 31, 2023 with a weighted average fair value of $64.34. The remaining shares will be distributed within the quarters ended June 30, 2023, September 30, 2023, and December 31, 2023.

The total fair value of RSUs vested under the 2011 Plan was $170.6 million and nil for the three months ended March 31, 2023 and 2022, respectively.

A summary of stock option activities under the 2011 Plan for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 is as follows (intrinsic value in thousands):

Number of
Awards

Weighted
Average
Exercise
Price

Weighted
Average
Fair Value

Weighted
Average
Remaining
Contractual
Life (in years)

Intrinsic
Value

Outstanding, December 31, 2021

2,574,354

$
1.43

$
1.02

7.07

$
231,286

Exercised

(551,195
)

$
0.91

$
0.70

$
42,063

Cancelled

(16,513
)

$
2.14

$
1.30

$
1,270

Outstanding, June 30, 2022

2,006,646

$
1.56

$
1.10

6.62

$
133,292

Vested and exercisable at June 30, 2022

1,452,085

$
1.21

$
0.88

6.47

$
96,966

Vested and expected to vest at June 30, 2022

1,986,007

$
1.55

$
1.09

6.62

$
131,956


	Number of Awards	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Intrinsic Value
Outstanding, December 31, 2022	1,456,328	$	1.93	6.20	$	89,749
Exercised	(209,966)	$	1.11		$	12,688
Cancelled	(938)	$	3.27
Outstanding, March 31, 2023	1,245,424	$	2.07	6.00	$	74,313
Vested and exercisable at March 31, 2023	1,114,127	$	1.77	5.90	$	66,811
Vested and expected to vest at March 31, 2023	1,242,625	$	2.06	6.00	$	74,155

The aggregate intrinsic values of options outstanding, vested and exercisable, and vested and expected to vest were calculated as the difference between the exercise price of the options and the estimated fair value of the Company’s common stock.

~~Restricted Stock Units~~

In March 2019, the Company granted, under the 2011 Plan, restricted stock unit awards (“RSUs”) to certain employees that vest only upon the satisfaction of both a time-based service condition and a performance-based condition. The performance-based condition is a liquidity event requirement that was satisfied on the effective date of the IPO of the Company’s common stock. The RSUs are subject to a ~~four-year~~ cliff vesting and will vest in March 2023. If the RSUs vest, the actual number of RSUs that will vest will be dependent on the per share value of the Company’s common stock, which is a market-based condition, determined based on the average closing price of the Company’s common stock for the three-month period immediately preceding the satisfaction of the service condition.

~~There was~~ 0 ~~activity related to RSUs under the 2011 Plan during the three and six months ended June 30, 2022. As of June 30, 2022 and December 31, 2021, the outstanding balance of RSU under 2011 Plan was~~ ~~2,712,674~~ ~~with a weighted average fair value at the time of grant of $0.17~~.

2020 Incentive Award Plan

Restricted Stock Units

RSUs are share awards that entitle the holder to receive freely tradable shares of the Company’s common stock upon vesting. The RSUs cannot be transferred and the awards are subject to forfeiture if the holder’s employment terminates prior to the release of the vesting restrictions. The RSUs generally vest either over a four-year period with straight-line vesting ~~and~~in equal amounts on a 25%quarterly basis or a 25% one-year cliff orvesting with remaining RSUs vest over a three-year period in equal amounts on a quarterly basis, provided the employee remains continuously employed with the Company. The fair value of the RSUs is equal to the closing price of the Company’s common stock on the grant date.

Table of Contents

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

RSU activities under the 2020 Plan is set forth below:

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

Number of
Awards

Weighted
Average
Fair Value

Outstanding, December 31, 2021

611,205

$
88.34

Granted

506,331

74.77

Vested

(123,745
)

84.15

Cancelled

(26,334
)

83.21

Outstanding, June 30, 2022

967,457

$
81.91


	Number of Awards	Weighted Average Fair Value
Outstanding, December 31, 2022	999,215	$	79.16
Granted	593,855	57.35
Vested	(82,511)	83.11
Cancelled	(13,217)	82.55
Outstanding, March 31, 2023	1,497,342	$	70.26

The total fair value of RSUs vested under ~~both~~ the ~~2011 Plan and~~ 2020 Plan was $~~6.3~~$5.2 million and $~~3.5~~$4.5 million for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021, and $10.8~~ ~~million and $3.7~~ ~~million for~~respectively.

During the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023, the Company granted non-qualified stock options to certain employees with vesting over a four-year period on a quarterly basis. The fair value of the stock options was calculated using the Black-Scholes option pricing model, which requires valuation assumptions of expected term, expected volatility, risk-free interest rate, and ~~2021, respectively.~~

~~Stock-based Compensation Expense~~

~~Total compensation cost~~expected dividend yield. For the purposes of the valuation model, the Company used the simplified method for ~~all share-based payment arrangements recognized,including $956,000~~ ~~and $724,000~~determining the expected term of the granted options. The simplified method was used since the Company does not have adequate historical data to utilize in calculating the expected term of options. The fair value for options granted was calculated using the following weighted average assumptions:



			Three Months Ended March 31, 2023
Expected term (in years)			4.56
Expected volatility			50.35%
Dividend yield			0.00%
Risk free interest rate			4.05%
Weighted-average fair value of options granted			$25.98 per share

A summary of stock option activities under the 2020 Plan for the three months ended ~~June 30, 2022 and 2021 and $~~March 31, 2023 is as follows (intrinsic value in thousands):


	Number of Awards	Weighted Average Exercise Price		Weighted Average Fair Value		Weighted Average Remaining Contractual Life (in years)	Intrinsic Value
Outstanding, December 31, 2022	—	$	—	$	—		$	—
Granted	181,870	$	56.00	$	25.98	—	$	—


Outstanding, March 31, 2023	181,870	$	56.00	$	25.98	6.90	$	1,044
Vested and exercisable at March 31, 2023	—	$	—	$	—	—	$	—
Vested and expected to vest at March 31, 2023	163,812	$	56.00	$	25.98	6.90	$	940

~~1.8~~Table of Contents ~~million and $1.3~~ ~~million for the six months ended June 30, 2022 and 2021, respectively, related~~

INARI MEDICAL, INC.

Notes to ~~the~~ Unaudited Condensed Consolidated Financial Statements

Employee Stock Purchase Plan ~~was as follows (in thousands):~~

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Cost of goods sold

$
375

$
202

$
740

$
379

Research and development

1,113

619

2,092

1,021

Selling, general and administrative

5,676

3,783

10,887

7,040

$
7,164

$
4,604

$
13,719

$
8,440

~~Total compensation costs as of June 30, 2022 related to all non-vested awards to be recognized in future periods was $68.0~~ ~~million and is expected to be recognized over the remaining weighted average period of~~ ~~3.0~~ ~~years.~~

~~Employee Stock Purchase Plan~~

In May 2020, the Company adopted the 2020 Employee Stock Purchase Plan (“ESPP”), which became effective on the date the ESPP was adopted by the Company’s board of directors. ~~The Company has initially reserved~~ ~~990,870~~ ~~shares of common stock for purchase under the ESPP.~~ Each offering to the employees to purchase stock under the ESPP will begin on each August 1 and February 1 and will end on the following January 31 and July 31, respectively. The first offering period began on August 1, ~~2020~~ ~~and ends on~~ ~~January 31, 2021~~.2020. On each purchase date, which falls on the last date of each offering period, ESPP participants will purchase shares of common stock at a price per share equal to 85%85% of the lesser of (1) the fair market value per share of the common stock on the offering date or (2) the fair market value of the common stock on the purchase date. The occurrence and duration of offering periods under the ESPP are subject to the determinations of the Company’s Compensation Committee, in its sole discretion.

The fair value of the ESPP shares is estimated using the Black-Scholes option pricing model with the following assumptions:

Six Months Ended June 30,

2022

2021
Expected term (in years)

0.5

0.5
Expected volatility

56.09%

51.91%
Dividend yield

0.00%

0.00%
Risk free interest rate

0.48%

0.08%


	Three Months Ended March 31,
	2023		2022
Expected term (in years)	0.5		0.5
Expected volatility	49.89	%	56.09	%
Dividend yield	0.00	%	0.00	%
Risk free interest rate	4.79	%	0.48	%

As of ~~June 30, 2022,~~March 31, 2023, a total of ~~139,857~~304,615 shares of common stock, including ~~54,808~~86,051 shares purchased in January ~~2022,~~2023, have been purchased under the ESPP, and a total of ~~1,846,664~~2,222,123 shares of common stock, including ~~503,135~~540,217 additional shares effective January 1, ~~2022,~~2023, are reserved for future purchases.

Stock-based Compensation Expense

Total compensation cost for all share-based payment arrangements recognized, including $1.0 million and $0.8 million of stock-based compensation expense related to the ESPP for the three months ended March 31, 2023 and 2022, respectively, was as follows (in thousands):


	Three Months Ended March 31,
	2023		2022
Cost of goods sold	$	525	$	364
Research and development	1,590		978
Selling, general and administrative	8,224		5,213
	$	10,339	$	6,555

Total compensation costs as of March 31, 2023 related to all non-vested awards to be recognized in future periods was $91.2 million and is expected to be recognized over the remaining weighted average period of 3.0 years.

13. ~~Income Taxes~~

INCOME TAXES

The following table reflects the Company’s provision for income taxes for the periods indicated (in thousands):


	Three Months Ended March 31,
	2023		2022
Loss before income taxes	$	(1,194)	$	(3,129)
Provision for income taxes	1,024		—
Net loss	$	(2,218)	$	(3,129)
Provision for income taxes as a percentage of loss before income taxes	(85.8%)		—%

Table of Contents

~~Inari Medical, Inc.~~

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

(Loss) income before income taxes

$
(8,935
)

$
4,080

$
(12,064
)

$
11,747

Provision for income taxes

1,252

12

1,252

210

Net (loss) income

$
(10,187
)

$
4,068

$
(13,316
)

$
11,537

Provision for income taxes as a percentage
of (loss) income before income taxes

14.0
%

0.3
%

10.4
%

1.8
%

The effective tax rate for all periods is driven by pre-tax income/(loss), business credits, equity compensation, state taxes, and the change in valuation allowance. The Company's income tax provision for interim reporting periods has historically been calculated by applying an estimate of the annual effective income tax rate for the full year to ~~"ordinary"~~“ordinary” income (loss) for the interim reporting period, which is calculated as pre-tax income (loss) excluding unusual and infrequently occurring discrete items. For the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, we calculated the income tax provision using a discrete effective income tax rate method as if the interim year to date period was an annual period. We determined that since normal changes in estimated ~~"ordinary"~~“ordinary” income (loss) would result in disproportionate changes in the estimated annual effective income tax rate, the Company's historical method of calculating its income tax provision for interim reporting periods would not provide a reliable estimate for the ~~six~~three months ended ~~June 30, 2022.~~

March 31, 2023.

For tax years beginning after December 31, 2021, certain research and development costs are required to be capitalized and amortized over a five year period under the Tax Cuts and Jobs Act, which was signed into law December 22, 2017. The Company has reviewed and incorporated this change, which will impact the expected U.S. federal and state tax expense and cash taxes to be paid for the tax year ending December 31, ~~2022.~~

2023.

Valuation Allowance

ASC 740 requires that the tax benefit of net operating losses, or NOLs, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryback or carryforward periods. As of December 31, ~~2021,~~2022, the Company maintained a full valuation allowance of $~~17.9~~$30.3 million against the Company's net deferred tax assets. As of ~~June 30, 2022,~~March 31, 2023, the Company believes that the deferred tax assets are currently not considered more likely than not to be realized and, accordingly, has maintained a full valuation allowance against its deferred tax assets. The Company will continue to assess its position on the realizability of its deferred tax assets, until such time as sufficient positive evidence may become available to allow the Company to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Any release of the valuation allowance may result in a material benefit recognized in the quarter of release.

Uncertain Tax Positions

The Company has recorded uncertain tax positions related to its federal and California research and development credit carryforwards. ~~NaN~~No interest or penalties have been recorded related to the uncertain tax positions due to credit carryforwards that are available to offset the uncertain tax positions. It is not expected that there will be a significant change in the uncertain tax position in the next twelve months. The Company is subject to U.S. federal and state income tax as well as to income tax in various foreign jurisdictions. In the normal course of business, the Company is subject to examination by tax authorities. As of the date of the financial statements, there are no income tax examinations in progress. The statute of limitations for tax years ended after December 31, ~~2016~~2019, December 31, 2018, and December 31, 2017 are open for federal and state, and ~~federal~~foreign tax purposes, respectively.

14. ~~Retirement Plan~~

RETIREMENT PLAN

In December 2017, the Company adopted the Inari Medical, Inc. 401(k) Plan which allows eligible employees after one month of service to contribute pre-tax and Roth contributions to the plan, as allowed by law. The plan assets are held by Vanguard and the plan administrator is Ascensus Trust Company. Beginning in January 2021, the Company contributes a $~~1.00~~$1.00 match for every $~~1.00~~$1.00 contributed by a participating employee up to the greater of $~~3,000~~$3,000 or 4%4% of eligible compensation under the plan, with such Company's contributions becoming fully vested immediately. Matching contribution expense was $~~2.7~~$2.7 million and $~~0.9~~$1.7 million for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021, and $~~respectively.

~~4.4~~ ~~million and $1.8~~ ~~million for the six months ended June 30, 2022 and 2021, respectively. The Company recorded an out-of-period adjustment in the second quarter~~Table of ~~2022 resulting in additional matching contribution expense of $~~Contents~~1.0~~ ~~million and $0.8~~ million for the three and six months ended June 30, 2022, respectively. The out-of-period adjustment was not considered material to the fiscal 2021 or fiscal 2022 annual consolidated financial statements.

~~Inari Medical, Inc.~~

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

15. ~~Net Income (Loss) Per Share~~NET INCOME (LOSS) PER SHARE

~~The components of~~Basic net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, without consideration for potential dilutive common shares. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net income (loss) per share calculation, shares from common stock options, RSUs and ESPP are potentially dilutive securities. For the periods the Company is in a net loss position, basic net loss per share is the same as ~~follows:~~

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Numerator:

Net (loss) income (in thousands)

$
(10,187
)

$
4,068

$
(13,316
)

$
11,537

Denominator:

Weighted average number of common shares
   outstanding - basic

53,183,767

49,669,652

52,075,399

49,512,800

Common stock equivalents from outstanding
   common stock options

0

2,940,337

0

3,057,128

Common stock equivalents from unvested RSUs

0

2,947,918

0

3,054,465

Common stock equivalents from ESPP

0

3,233

0

6,924

Common stock equivalents from restricted stock

0

33,876

0

33,876

Weighted average number of common shares
   outstanding - diluted

53,183,767

55,595,016

52,075,399

55,665,193

Net (loss) income per share:

Basic

$
(0.19
)

$
0.08

$
(0.26
)

$
0.23

Diluted

$
(0.19
)

$
0.07

$
(0.26
)

$
0.21

diluted net loss per share as the inclusion of all potential dilutive common shares would have been anti-dilutive.

The following outstanding potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022 due to their anti-dilutive effect:


	Three Months Ended March 31,
	2023	2022
Common stock options	1,427,294	2,241,630
RSUs	1,497,342	3,649,255
Restricted stock subject to future vesting	—	10,404
	2,924,636	5,901,289

Table of Contents

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and related notes thereto for the year ended December 31, ~~2021,~~2022, included in our Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2022. In addition to historical financial information, the following discussion contains forward-looking statements that are based upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under ~~Part II,~~“Part I, Item ~~1A, “Risk~~1A. Risk Factors” in ~~this Quarterly~~our Annual Report on Form ~~10-Q.~~

~~Overview~~

10-K for the year ended December 31, 2022. Please also see the section titled “Cautionary Note Regarding Forward-Looking Statements.”

Patients first. No small plans. Take care of each other. These are the guiding principles that form the ethos of Inari Medical. We are ~~a medical device company with a~~committed to improving lives in extraordinary ways by creating innovative solutions for both unmet and underserved health needs. In addition to our purpose-built solutions, we leverage our capabilities in education, clinical research, and program development to improve patient outcomes. We are passionate about our mission to ~~treat~~establish our treatments as the standard of care for venous thromboembolism and ~~transform the lives of patients suffering from venous and other diseases.~~ beyond. We are just getting started.

Our ~~current product offerings~~solutions (“products”) primarily consist of ~~two minimally-invasive,~~our ClotTriever and FlowTriever systems, which are minimally invasive, novel, catheter-based mechanical thrombectomy systems ~~which~~that are purpose-built for the specific characteristic of the venous system and the treatment of the two distinct manifestations of venous thromboembolism, or VTE - deep vein thrombosis, or DVT, and pulmonary embolism, or PE. Our ClotTriever ~~product~~system is FDA-cleared for the treatment of ~~DVT. Our~~DVT, and our FlowTriever ~~product~~system is the first thrombectomy system FDA-cleared for the treatment of PE and is also FDA-cleared for clot in transit in the right atrium.

~~We believe~~ Our solutions also consist of our InThrill system, which is FDA-cleared for the ~~best way to treat VTE~~removal of thrombus from the peripheral vasculature and ~~improve the quality of life of patients suffering from this disease is to safely and effectively remove the blood clot. With that in mind, we~~ designed ~~and purpose-built our ClotTriever and FlowTriever systems. The ClotTriever is a mechanical thrombectomy system designed to core, capture and remove large clots from large~~for smaller vessels, and our ProTrieve sheath, which is ~~used to treat DVT. The FlowTriever is a large bore catheter-based aspiration and mechanical thrombectomy system designed to remove large clots~~FDA-cleared for removal of thrombus from ~~large vessels to treat PE. Both systems are designed to eliminate~~ the ~~need for thrombolytic drugs.~~

We believe our mission-focused and highly-trained commercial organization provides a significant competitive advantage. Our most important relationships are between our sales representatives and our treating physicians, which include interventional cardiologists, interventional radiologists and vascular surgeons. We recruit sales representatives who have substantial and applicable medical device and/or sales experience. Our front-line sales representatives typically attend procedures, which puts us at the intersection of the patients, products and physicians. We have developed systems and processes to harness the information gained from these relationships and we leverage this information to rapidly iterate products, introduce and execute physician education and training programs and scale our sales organization. We market and sell our products to hospitals, which are reimbursed by various third-party payors.

peripheral vasculature through aspiration.

In March 2022, we completed an underwritten public offering, or the Follow-On Offering, of 2,300,000 shares of common stock, at a price of $81.00 per share. We received net proceeds of approximately $174.4 million, after deducting underwriters’ discounts and commissions and offering costs.

As of ~~June 30, 2022,~~March 31, 2023, we had cash, cash equivalents, and short-term investments of ~~$330.5~~$328.4 million, no long-term debt outstanding and an accumulated deficit of ~~$30.9~~$49.1 million.

For the three months ended ~~June 30, 2022,~~March 31, 2023, the Company generated ~~$92.7~~$116.2 million in revenues with a gross margin of ~~88.8%~~88.2% and net loss of ~~$10.2~~$2.2 million, as compared to revenues of ~~$63.5~~$86.8 million with a gross margin of ~~92.4%~~88.5% and net ~~income~~loss of ~~$4.1~~$3.1 million for the three months ended ~~June 30, 2021.~~

For the six months ended June 30, 2022, the Company generated $179.5 million in revenues with a gross margin of 88.7% and net loss of $13.3 million, as compared to revenues of $120.9 million with a gross margin of 92.2% and net income of $11.5 million for the six months ended June 30, 2021.

~~COVID-19~~

The global healthcare system continues to face an unprecedented challenge as a result of the COVID-19 situation and its impact. COVID-19 has had and may continue to have an adverse impact on aspects of our business, including the demand for our products, operations, and ability to research and develop and bring new products and services to market.

In response to the impact of COVID-19, we implemented a variety of measures to help manage through the impact and position us to keep operations running efficiently. However, with hospitals facing staff or other resource constraints, to the extent individuals and hospital systems de-prioritize, delay or cancel deferrable medical procedures, our business, cash flows, financial condition and results of operations may continue to be negatively affected.

~~The actual and perceived impact of COVID-19 is still evolving and cannot be predicted. A~~s a result, we cannot assure you that our recent procedure volumes are indicative of future results or that we will not experience additional negative impacts associated with COVID-19 or staffing shortages, which could be significant.March 31, 2022.

We ~~continue to focus our efforts on the health and safety of patients, healthcare providers and employees, while executing our mission of transforming lives of patients. While we expect the COVID-19~~

~~pandemic may continue to negatively impact 2022 performance, we believe the long-term fundamentals remain strong and we will continue to effectively manage through these challenges.~~

~~Revenue~~

~~We currently derive~~derived substantially all our revenue from the sale of our ClotTriever and FlowTriever systems directly to hospitals primarily located in the United States. Our customers typically purchase our products through an initial stocking order, ~~of our products~~ and then reorder replenishment inventory as procedures are performed. No single customer accounted for 10% or more of our revenue during the three months ended March 31, 2023 and 2022. We expect our revenue to increase in absolute dollars as we expand our offerings, grow sales organization and sales territories, add customers, expand the base of physicians that are trained to use our products, expand awareness of our products with new and existing customers and as physicians perform more procedures using our products.

Revenue ~~for~~from ClotTriever and other systems and FlowTriever ~~systems~~system as a percentage of total revenue is as follows:

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

ClotTriever

33
%

33
%

32
%

34
%
FlowTriever

67
%

67
%

68
%

66
%

~~Critical Accounting Policies and Estimates~~

Other than the accounting policy changes discussed in "Note 2 - Summary of Significant Accounting Policies" to our condensed consolidated financial statements, which is included in "Part I, Item 1. Condensed Consolidated Financial Statements (Unaudited)", there have been no significant changes in our critical accounting policies during the six months ended June 30, 2022, as compared to the critical accounting policies disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 23, 2022.

~~Results of Operations~~


	Three Months Ended March 31,
	2023		2022
ClotTriever and other systems	34	%	32	%
FlowTriever system	66	%	68	%

RESULTS OF OPERATIONS

Comparison of the three months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~

The following table sets forth the components of our unaudited condensed consolidated statements of operations in dollars and as percentage of revenue for the periods presented (dollars in thousands):

Three Months Ended June 30,

2022

%

2021

%

Change $

Revenue

$
92,744

100.0
%

$
63,453

100.0
%

$
29,291

Cost of goods sold

10,347

11.2
%

4,814

7.6
%

5,533

Gross profit

82,397

88.8
%

58,639

92.4
%

23,758

Operating expenses:

Research and development

18,569

20.0
%

11,630

18.3
%

6,939

Selling, general and administrative

73,156

78.9
%

42,897

67.6
%

30,259

Total operating expenses

91,725

98.9
%

54,527

85.9
%

37,198

Income (loss) from operations

(9,328
)

(10.1
%)

4,112

6.5
%

(13,440
)
Other income (expense)

Interest income

214

0.2
%

35

0.1
%

179

Interest expense

(73
)

(0.1
%)

(74
)

(0.1
%)

1

Other income (expense)

252

0.3
%

7

0.0
%

245

Total other expenses, net

393

0.4
%

(32
)

0.0
%

425

Income (loss) before income taxes

$
(8,935
)

(9.7
%)

$
4,080

6.5
%

$
(13,015
)


	Three Months Ended March 31,								Change $
	2023		%		2022		%
Revenue	$	116,167	100.0	%	$	86,752	100.0	%	$	29,415
Cost of goods sold	13,741		11.8	%	9,967		11.5	%	3,774
Gross profit	102,426		88.2	%	76,785		88.5	%	25,641
Operating expenses
Research and development	22,064		19.0	%	16,135		18.6	%	5,929
Selling, general and administrative	85,700		73.8	%	63,732		73.5	%	21,968
Total operating expenses	107,764		92.8	%	79,867		92.1	%	27,897
Loss from operations	(5,338)		(4.6)	%	(3,082)		(3.6)	%	(2,256)
Other income (expense)
Interest income	4,145		3.6	%	50		0.1	%	4,095
Interest expense	(40)		—	%	(73)		(0.1)	%	33
Other income (expense)	39		—	%	(24)		—	%	63
Total other income (expense)	4,144		3.6	%	(47)		(0.1)	%	4,191
Loss before income taxes	(1,194)		(1.0)	%	(3,129)		(3.6)	%	1,935
Provision for income taxes	1,024		0.9	%	—		—	%	1,024
Net loss	$	(2,218)	(1.9)	%	$	(3,129)	(3.6)	%	$	911

Revenue. Revenue increased ~~$29.3~~$29.4 million or ~~46.2%~~33.9%, to ~~$92.7~~$116.2 million during the three months ended ~~June 30, 2022,~~March 31, 2023, compared to ~~$63.5~~$86.8 million during the three months ended ~~June 30, 2021.~~March 31, 2022. The increase in revenue was due primarily to an increase in the number of ~~product offerings and the number of units~~products sold as we expanded our sales territories, opened new accounts and achieved deeper penetration of our products into existing ~~accounts.~~accounts, and introduced new products.

Cost of Goods Sold. Cost of goods sold increased ~~$5.5~~$3.8 million, or ~~114.9%~~37.9%, to ~~$10.3~~$13.7 million during the three months ended ~~June 30, 2022,~~March 31, 2023, compared to ~~$4.8~~$10.0 million during the three months ended ~~June 30, 2021.~~March 31, 2022. This increase was primarily due to the increase in the number of products sold and additional manufacturing overhead costs ~~incurred as we invested significantly in our new facility and operational infrastructure~~ to support ~~our~~anticipated future growth.

Gross Margin. Gross margin for the three months ended ~~June 30, 2022~~March 31, 2023 decreased slightly to ~~88.8%~~88.2%, compared to ~~92.4%~~88.5% for the three months ended ~~June 30, 2021,~~March 31, 2022, primarily due to ~~a decrease~~the increase in ~~operating leverage due to the expanded footprint of our manufacturing capacity and~~costs associated with the addition of new ~~products to~~components offered under our FlowTriever ~~per procedure pricing model.~~system price partially offset by manufacturing efficiencies.

Research and Development Expenses (“R&D”). R&D expenses increased ~~$7.0~~$5.9 million, or ~~59.7%~~36.7%, to ~~$18.6~~$22.1 million during the three months ended ~~June 30, 2022,~~March 31, 2023, compared to ~~$11.6~~$16.1 million during the three months ended ~~June 30, 2021.~~March 31, 2022. The increase in R&D expenses was primarily due to increases of ~~$5.1~~$3.9 million of personnel-related expenses, ~~$1.0~~$1.3 million ~~in materials~~of material and supplies ~~and $0.5 million of clinical and regulatory expenses, in support of our growth drivers to develop new products and build the clinical evidence base.~~

~~Selling, General and Administrative Expenses~~. SG&A expenses increased $30.3 million, or 70.5%, to $73.2 million during the three months ended June 30, 2022, compared to $42.9 million during the three months ended June 30, 2021. The increase in SG&A costs was primarily due to increases of $19.4 million in personnel-related expenses as a result of increased headcount across our organization and increased commissions due to higher revenue, $3.2 million in marketing expenses, $2.9 million in travel and related expenses, ~~$2.3 million in professional fees, and $1.1 million in facility related expenses, particularly related to our new facility.~~

~~Interest Income.~~ Interest income increased by $179,000 or 511.4% to $214,000 during the three months ended June 30, 2022, compared to $35,000 during the three months ended June 30, 2021. The increase in interest income was primarily due to higher average cash and short-term investments balances during the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

~~Interest Expense.~~ ~~Interest expense was relatively consistent with $73,000 during the three months ended June 30, 2022, compared to $74,000 during the three months ended June 30, 2021.~~

~~Other Income (Expense).~~ ~~Other income of $252,000 for the three months ended June 30, 2022 consisted primarily of foreign currency transaction gains.~~

~~Comparison of the six months ended June 30, 2022 and 2021~~

~~The following table sets forth the components of our unaudited condensed consolidated statements of operations in dollars and as percentage of revenue for the periods presented (dollars in thousands):~~

Six Months Ended June 30,

2022

%

2021

%

Change $

Revenue

$
179,496

100.0
%

$
120,850

100.0
%

$
58,646

Cost of goods sold

20,314

11.3
%

9,437

7.8
%

10,877

Gross profit

159,182

88.7
%

111,413

92.2
%

47,769

Operating expenses:

Research and development

34,704

19.3
%

19,793

16.4
%

14,911

Selling, general and administrative

136,888

76.3
%

79,795

66.0
%

57,093

Total operating expenses

171,592

95.6
%

99,588

82.4
%

72,004

Income from operations

(12,410
)

(6.9
%)

11,825

9.8
%

(24,235
)
Other income (expense)

Interest income

264

0.1
%

103

0.1
%

161

Interest expense

(146
)

(0.1
%)

(147
)

(0.1
%)

1

Other income (expense)

228

0.1
%

(34
)

0.0
%

262

Total other expenses, net

346

0.1
%

(78
)

0.0
%

424

Income (loss) before income taxes

$
(12,064
)

(6.8
%)

$
11,747

9.8
%

$
(23,811
)

~~Revenue~~. Revenue increased $58.6 million, or 48.5%, to $179.5 million during the six months ended June 30, 2022, compared to $120.9 million during the six months ended June 30, 2021. The increase in revenue was due primarily to an increase in the number of product offerings and the number of units sold as we expanded our sales territories, opened new accounts and achieved deeper penetration of our products into existing accounts.

~~Cost of Goods Sold.~~ Cost of goods sold increased $10.9 million, or 115.3%, to $20.3 million during the six months ended June 30, 2022, compared to $9.4 million during the six months ended June 30, 2021. This increase was primarily due to the increase in the number of products sold and additional manufacturing overhead costs incurred as we invested significantly in our new facility and operational infrastructure to support our growth.

~~Gross Margin~~. Gross margin for the six months ended June 30, 2022 decreased to 88.7%, compared to 92.2% for the six months ended June 30, 2021, primarily due to a decrease in operating leverage due to the expanded footprint of our manufacturing capacity and the addition of new products to our FlowTriever per procedure pricing model.

~~Research and Development Expenses~~. R&D expenses increased $14.9 million, or 75.3%, to $34.7 million during the six months ended June 30, 2022, compared to $19.8 million during the six months ended June 30, 2021. The increase in R&D expenses was

~~primarily due to increases of $10.1 million of personnel-related expenses, $2.8 million in materials and supplies,~~ $0.7 million of clinical and regulatory expenses, and ~~$0.7~~$0.2 million in software costs and depreciation expenses, in support of our growth drivers to develop new products and build the clinical evidence ~~base.~~base, partially offset by a decrease of $0.4 million of expenses related to professional fees.

Selling, General and Administrative Expenses (“SG&A”). SG&A expenses increased ~~$57.1~~$22.0 million, or ~~71.5%~~34.5%, to ~~$136.9~~$85.7 million during the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, compared to ~~$79.8~~$63.7 million during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022. The increase in SG&A costs was primarily due to increases of ~~$38.6~~$19.0 million in personnel-related expenses as a result of increased headcount ~~across our organization~~ and increased commissions due to higher revenue, ~~$4.8~~$1.5 million in travel and related expenses, ~~$4.8~~$0.4 million in sales and marketing related expenses, ~~$4.0~~$0.4 million inof material and supplies related expenses, and $0.3 million of expenses related to professional fees, ~~and $2.3~~partially offset by $0.3 million ~~in facility~~of insurance related ~~expenses, particularly related to our new facility.~~expenses.

Interest Income. Interest income increased by ~~$161,000 or 156.3% to $264,000~~$4.1 million during the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, compared to ~~$103,000 during~~ the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022. The increase in interest income was primarily due to ~~higher~~an increase in the average ~~cash and~~balance of our short-term investments ~~balances~~as well as increased interest rates during the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 compared to the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

Interest Expense. Interest expense ~~was relatively consistent with $146,000~~decreased to $40,000 during the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, compared to ~~$147,000~~$73,000 during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

Other ~~income (Expenses)~~Income (Expense). Other income of ~~$228,000~~$39,000 for the ~~six~~three months ended ~~June 30,~~March 31, 2023 consisted primarily of foreign currency transaction gains. Other expense of $24,000 for the three months ended March 31, 2022 consisted primarily of foreign currency transaction ~~gains.~~losses.

~~Liquidity~~Income Taxes. Income taxes increased to $1.0 million for the three months ended March 31, 2023. The increase in the income taxes primarily relates to an increase in the current year U.S. federal and ~~Capital Resources~~state income taxes due to the use of calculating the interim tax expense on a discrete basis for the three months ended March 31, 2023.

LIQUIDITY AND CAPITAL RESOURCES

To date, our primary sources of capital have been the net proceeds we received through private placements of preferred stock, debt financing agreements, the sale of common stock in our IPO completed on May 27, 2020 and ~~Follow-On Offering,~~follow-on offering completed in March 2022, and revenue from the sale of our products. On May 27, 2020, we completed our IPO, including the underwriters full exercise of their over-allotment option, selling 9,432,949 shares of our common stock at $19.00 per share. Upon completion of our IPO, we received net proceeds of approximately $163.0 million, after deducting underwriting discounts and commissions and offering expenses. In March 2022, we completed a Follow-On Offering by issuing 2,300,000 shares of common stock, at an offering price of $81.00 per share, for net proceeds to us of approximately $174.4 million after deducting underwriting discounts and commissions and offering expenses. As of ~~June 30, 2022,~~March 31, 2023, we had cash and cash equivalents of ~~$79.7~~$56.6 million and short-term investments in debt securities of ~~$250.8 million~~$271.9 million. We maintain cash and ~~an accumulated deficit~~cash equivalents with financial institutions in excess of ~~$30.9 million.~~ insured limits.

In ~~September 2020,~~December 2022, we ~~entered into a~~amended our revolving Credit Agreement with Bank of America which provides for loans up to a maximum of ~~$30~~$40.0 million and increases the optional accordion to $120.0 million. As of ~~June 30, 2022,~~March 31, 2023, we had no principal outstanding under the Amended Credit Agreement and the amount available to borrow was approximately ~~$28.2~~$38.0 million. The Amended Credit Agreement also includes a Letter of Credit subline facility (“LC Facility”) of up to $5.0 million. In February 2023, we amended the LC Facility to increase the limit to up to $10.0 million. The aggregate stated amount outstanding of letter of credits reduces the total borrowing base available under the Amended Credit Agreement and is subject to certain fees. As of March 31, 2023, we had 3 letters of credit in the aggregated amount of $2.0 million outstanding under the LC Facility. For additional information about the Amended Credit Agreement, see note

10. Credit Facility.

Our other short-term and long-term material cash requirements, from known contractual obligations as of March 31, 2023, include operating lease liabilities, uncertain tax positions and royalty obligations from license and sublicense agreements, as discussed in the Condensed Consolidated Financial Statements section of this report.

Based on our current planned operations, we ~~expect~~anticipate that our cash and cash equivalents, short-term investments and available borrowings under our Amended Credit Agreement will ~~enable us~~be sufficient to fund our operating expenses for at least the next 12 ~~months from~~ months. Our primary short-term needs for capital for our current planned operations, which are subject to change, include:

•support of commercialization efforts to expand our sales force along with expanding into new markets, and developing products to enhance performance and address unmet market needs;

•the ~~date hereof.~~continued advancement of research and development including clinical study activities; and

•potential expansion needs of our facilities.

If our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, ~~including because of lower demand for our products as a result of the risks described in this Quarterly Report,~~ we may seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing. The sale of equity and convertible debt securities may result in dilution to our stockholders and, in the case of preferred equity securities or convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock. The terms of debt securities issued or borrowings pursuant to a credit agreement could impose significant restrictions on our operations. If we raise funds through collaborations and licensing arrangements, we might be required to relinquish significant rights to our platform technologies or products or grant licenses on terms that are not favorable to us. Additional capital may not be available on reasonable terms, or at all.

~~Cash Flows~~

In addition, market conditions impacting financial institutions could impact our ability to access some or all of our cash and cash equivalents, and we may be unable to obtain alternative funding when and as needed on acceptable terms, if at all.

The following table summarizes our cash flows for each of the periods indicated (in thousands):

Six Months Ended June 30,

2022

2021

Net cash provided by (used in):

Operating activities

$
(12,161
)

$
16,068

Investing activities

(175,371
)

(40,937
)
Financing activities

174,947

1,700

Effect of foreign exchange rate on cash and cash equivalents

(443
)

(126
)
Net increase (decrease) in cash and cash equivalents

$
(13,028
)

$
(23,295
)


	Three Months Ended March 31,
	2023		2022
Net cash provided by (used in):
Operating activities	$	(2,013)	$	(9,100)
Investing activities	(4,043)		(73,511)
Financing activities	2,466		176,542
Effect of foreign exchange rate on cash and cash equivalents	(70)		(127)
Net (decrease) increase in cash and cash equivalents	$	(3,660)	$	93,804

Net ~~Cash (Used in) Provided by Operating Activities~~

cash used in operating activities

Net cash used in operating activities for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 was ~~$12.2~~$2.0 million, consisting primarily of net loss of ~~$13.3~~$2.2 million and a decrease in net operating assets of ~~$16.2~~$9.4 million, offset by non-cash charges of ~~$17.3~~$9.6 million. The decrease in net operating assets was primarily due to decreases in accrued liabilities and accounts payable of $7.8 million and $0.3 million, respectively, due to the timing of payments and growth of our operations, a decrease in lease prepayments for lessor's owned leasehold improvements of $0.5 million and a decrease in operating lease liabilities of $0.4 million, coupled with an increase in inventories of $3.8 million, offset by decreases in accounts receivable of $2.8 million and prepaid and other assets of $0.5 million. The non-cash charges primarily consisted of stock-based compensation expense of $10.3 million, amortization of the right-of-use assets of $1.6 million and depreciation of $1.3 million, partially offset by amortization of premium and discount on marketable securities of $3.8 million.

Net cash used in operating activities for the three months ended March 31, 2022 was $9.1 million, consisting primarily of net loss of $3.1 million and a decrease in net operating assets of $14.3 million, offset by non-cash charges of $8.3 million. The decrease in net operating assets was primarily due to decreases in accounts payable and accrued liabilities of ~~$2.2~~$6.7 million due to the timing of payments and growth of our operations, lease prepayments for lessor's owned leasehold improvements of ~~$3.0~~$2.1 million and a decrease in operating lease liabilities of ~~$0.5~~$0.3 million, coupled with increases in inventories of ~~$5.7~~$2.8 million and accounts receivable of ~~$7.0~~$2.7 million, offset by a decrease in prepaid and other assets of ~~$1.0~~$0.3 million. The non-cash charges primarily

consisted of ~~$13.7~~$6.6 million in stock-based compensation expense, ~~$2.3~~$1.1 million in depreciation, and ~~$1.2~~$0.6 million in amortization of the right-of-use assets.

Net cash ~~provided by operating~~used in investing activities for the six months ended June 30, 2021 was $16.1 million, consisting primarily of net income of $11.5 million and non-cash charges of $10.1 million, offset by an increase in net operating assets of $5.6 million. The increase in net operating assets was primarily due to increases in accounts receivable of $3.5 million and inventories of $7.5 million to support the growth of our operations, an increase in prepaid and other assets of $11.3 million primarily from deposits related to Oak Canyon and prepaid insurance, which were partially offset by increases in accounts payable of $7.3 million and accrued liabilities of $9.8 million due to timing of payments and growth of our operations and a decrease in operating lease liabilities of $0.4 million. The non-cash charges primarily consisted of $8.4 million in stock-based compensation, $1.3 million in depreciation, $0.4 million in amortization of the right-of-use assets.

~~Net Cash Used in Investing Activities~~

Net cash used in investing activities for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 was ~~$175.4~~$4.0 million, consisting of ~~$230.8~~$122.1 million purchases of short-term investments, $1.0 million purchases of property and equipment, and $0.3 million purchases of other investments, offset by maturities of short-term investments of $119.3 million.

Net cash used in investing activities for the three months ended March 31, 2022 was $73.5 million, consisting of $112.1 million purchases of short-term investments, $5.7 million purchases of other investments, and ~~$5.9~~$2.7 million purchases of property and equipment, offset by maturities of short-term investments of ~~$67.0~~$47.0 million.

Net cash ~~used in investing~~provided by financing activities for the six months ended June 30, 2021 was $40.9 million consisting of $84.7 million purchases of short-term securities coupled with $6.2 million purchases of property and equipment, offset by the maturity of short-term investment of $50.0 million.

~~Net Cash Provided by Financing Activities~~

Net cash provided by financing activities in the ~~six~~three months ended ~~June 30,~~March 31, 2023 was $2.5 million, consisting of $4.2 million proceeds from the issuance of common stock under our employee stock purchase plan and $0.2 million of proceeds from exercise of stock options, offset by $1.9 million of tax payments related to vested RSUs.

Net cash provided by financing activities in the three months ended March 31, 2022 was ~~$174.9~~$176.5 million, consisting of $174.4 million net proceeds from the issuance of common stock in the public offering, net of issuance costs of $11.9 million, $3.4 million proceeds from the issuance of common stock under our employee stock purchase plan and ~~$0.5~~$0.3 million of proceeds from exercise of stock options, offset by ~~$3.4~~$1.6 million of tax payments related to vested RSUs.

CRITICAL ACCOUNTING POLICIES ESTIMATES

Other than the accounting policy changes discussed in note 2 . Summary of Significant Accounting Policies

~~Net cash provided by financing activities~~ to our condensed consolidated financial statements, which is included in the six months ended June 30, 2021 was $1.7 million, consisting of proceeds of $1.9 million in proceeds from the issuance of common stock under our employee stock purchase plan and $0.6 million of proceeds from exercise of stock options, offset by $0.8 million of tax payments related to vested RSUs.

~~Off-Balance Sheet Arrangements~~

We do not have any off-balance sheet arrangements, as defined by applicable regulations of the U.S. Securities and Exchange Commission, that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

~~Contractual Obligations and Commitments~~

~~There~~“Part I, Item 1. Condensed Consolidated Financial Statements (Unaudited)”, there have been no ~~material~~significant changes ~~outside~~in our critical accounting policies during the ~~ordinary course of business~~three months ended March 31, 2023, as compared to the ~~Company’s contractual obligations from those~~critical accounting policies disclosed in ~~“Management’s~~Management's Discussion and Analysis of Financial Condition and Results of ~~Operations”~~Operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, filed with the SEC on February ~~23, 2022.~~27, 2023.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

There have been no material changes to our quantitative and qualitative disclosures about market risk as compared to the quantitative and qualitative disclosures about market risk described in our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, filed with the SEC on February ~~23, 2022~~27, 2023 under “Part II, Item 7. Quantitative and Qualitative Disclosures about Market Risk.

”

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

Our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended, or the Exchange Act), as of ~~June 30, 2022.~~March 31, 2023. Based on such evaluation, our Principal Executive Office and Principal Financial Officer concluded that, as of ~~June 30, 2022,~~March 31, 2023, these disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded,

processed, summarized and reported, with the time period specified in the SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management.

Changes in internal control over financial reporting

During the three months ended ~~June 30, 2022,~~March 31, 2023, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent limitations on effectiveness of controls and procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any control and procedure, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

PART ~~II—~~II — OTHER INFORMATION

Item 1. ~~Legal Proceedings.~~

LEGAL PROCEEDINGS

We are not subject to any material legal proceedings.

Item 1A. ~~Risk Factors.~~

RISK FACTORS

For a discussion of our potential risks and uncertainties, see the information in Part I, ~~"Part~~“Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. As of the date of this Report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~

2022.

Item 2. ~~Unregistered Sales of Equity Securities and Use of Proceeds.~~

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Item 3. ~~Defaults Upon Senior Securities.~~

DEFAULTS UPON SENIOR SECURITIES

Item 4. ~~Mine Safety Disclosures.~~

MINE SAFETY DISCLOSURES

Item 5. ~~Other Information.~~OTHER INFORMATION

Table of Contents

~~None.~~

Item 6. ~~Exhibits.~~

Incorporated by reference
Exhibit Number
Description
Form
File Number
Exhibit
Filing Date
3.1
Amended and Restated Certificate of Incorporation
8-K
001-39293
3.1
5/28/2020
3.2
Amended and Restated Bylaws
8-K
001-39293
3.2
5/28/2020
10.1
Third Amendment to Loan, Guaranty and Security Agreement, dated July 21, 2022

31.1
Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2
Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1†
Certifications of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2†
Certifications of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS
Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its EBRL tags are embedded within the inline XBRL document.

101.SCH
Inline XBRL Taxonomy Extension Schema Document

101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document

104
Cover Page with Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

EXHIBITS

Exhibit Number

Description

Incorporated by reference

Form

File Number

Exhibit

Filing Date

3.1

Amended and Restated Certificate of Incorporation

8-K

001-39293

3.1

5/28/2020

3.2

Amended and Restated Bylaws

8-K

001-39293

3.2

5/28/2020

10.1^

Lease Agreement, dated February 14, 2023, by and between Inari Medical Inc. and Oak Canyon Creek LLC

10.2*

Amended and Restated Non-Employee Director Compensation Program

31.1

Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1†

Certifications of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2†

Certifications of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its EBRL tags are embedded within the inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page with Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

_____________________________

† The certifications attached as Exhibit 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are deemed furnished and not filed with the U.S. Securities and Exchange Commission and are not to be incorporated by reference into any filing of Inari Medical, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

^ Portions of this exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information is not material and is the type that the Company treats as private or confidential.

* Indicates management contract or compensatory plan.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			Inari Medical, Inc.

Date: ~~August~~May 3, ~~2022~~ 2023	By:	/s/ ~~William Hoffman~~Andrew Hykes
	Andrew Hykes		~~William Hoffman~~
			Chief Executive Officer and President (Principal Executive Officer)

Date: ~~August~~May 3, ~~2022~~ 2023	By:	/s/ Mitchell Hill
			Mitchell Hill
			Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)


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)


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	67
	Notes to Unaudited Condensed Consolidated Financial Statements	78
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1922
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2326
Item 4.	Controls and Procedures	2326
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	2528
Item 1A.	Risk Factors	2528
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2528
Item 3.	Defaults Upon Senior Securities	2528
Item 4.	Mine Safety Disclosures	2528
Item 5.	Other Information	2528
Item 6.	Exhibits	2629
Signatures		2730


	June 30, 2022			December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	79,724		$	92,752
Short-term investments in debt securities		250,772			83,348
Accounts receivable, net		49,171			42,351
Inventories, net		26,674			21,053
Prepaid expenses and other current assets		4,997			5,694
Total current assets		411,338			245,198
Property and equipment, net		20,076			16,471
Operating lease right-of-use assets		46,653			44,909
Deposits and other assets		6,195			981
Long-term investments in debt securities		0			3,983
Total assets	$	484,262		$	311,542
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	4,748		$	6,541
Payroll-related accruals		27,695			24,433
Accrued expenses and other current liabilities		8,076			10,737
Operating lease liabilities, current portion		465			802
Total current liabilities		40,984			42,513
Operating lease liabilities, noncurrent portion		28,196			28,404
Other long-term liability		1,304			1,416
Total liabilities		70,484			72,333
Commitments and contingencies (Note 7)
Stockholders' equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021		0			0
Common stock, $0.001 par value, 300,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 53,305,825 and 50,313,452 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		53			50
Additional paid in capital		445,807			257,144
Accumulated other comprehensive loss		(1,183	)		(402	)
Accumulated deficit		(30,899	)		(17,583	)
Total stockholders' equity		413,778			239,209
Total liabilities and stockholders' equity	$	484,262		$	311,542


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Revenue	$	92,744		$	63,453		$	179,496		$	120,850
Cost of goods sold		10,347			4,814			20,314			9,437
Gross profit		82,397			58,639			159,182			111,413
Operating expenses
Research and development		18,569			11,630			34,704			19,793
Selling, general and administrative		73,156			42,897			136,888			79,795
Total operating expenses		91,725			54,527			171,592			99,588
(Loss) income from operations		(9,328	)		4,112			(12,410	)		11,825
Other income (expense)
Interest income		214			35			264			103
Interest expense		(73	)		(74	)		(146	)		(147	)
Other income (expense)		252			7			228			(34	)
Total other income (expenses)		393			(32	)		346			(78	)
(Loss) income before income taxes		(8,935	)		4,080			(12,064	)		11,747
Provision for income taxes		1,252			12			1,252			210
Net (loss) income	$	(10,187	)	$	4,068		$	(13,316	)	$	11,537
Other comprehensive income (loss)
Foreign currency translation adjustments		(291	)		57			(408	)		(123	)
Unrealized (loss) gain on available-for-sale debt securities		(125	)		(6	)		(373	)		12
Total other comprehensive (loss) income		(416	)		51			(781	)		(111	)
Comprehensive (loss) income	$	(10,603	)	$	4,119		$	(14,097	)	$	11,426
Net (loss) income per share
Basic	$	(0.19	)	$	0.08		$	(0.26	)	$	0.23
Diluted	$	(0.19	)	$	0.07		$	(0.26	)	$	0.21
Weighted average common shares used to compute net (loss) income per share
Basic		53,183,767			49,669,652			52,075,399			49,512,800
Diluted		53,183,767			55,595,016			52,075,399			55,665,193


	Common Stock				Additional Paid In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital			Income (Loss)			Deficit			Equity
Balance, December 31, 2021		50,313,452	$	50	$	257,144		$	(402	)	$	(17,583	)	$	239,209
Options exercised for common stock		322,882		1		344			—			—			345
Shares issued under Employee Stock Purchase Plan		54,808		—		3,427			—			—			3,427
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for taxes		31,763		—		(1,624	)		—			—			(1,624	)
Issuance of common stock in public offering, net of issuance costs of $11.9 million		2,300,000		2		174,392			—			—			174,394
Share-based compensation expense		—		—		6,555			—			—			6,555
Other comprehensive loss		—		—		—			(365	)		—			(365	)
Net loss		—		—		—			—			(3,129	)		(3,129	)
Balance, March 31, 2022		53,022,905		53		440,238			(767	)		(20,712	)		418,812
Options exercised for common stock		228,313		—		156			0			0			156
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for taxes		54,607		—		(1,751	)		—			—			(1,751	)
Share-based compensation expense		—		—		7,164			—			—			7,164
Other comprehensive loss		—		—		—			(416	)		—			(416	)
Net loss		—		—		—			—			(10,187	)		(10,187	)
Balance, June 30, 2022		53,305,825	$	53	$	445,807		$	(1,183	)	$	(30,899	)	$	413,778

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
Shares issued 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 expense		—		—		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 expense		—		—		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


	June 30, 2022
	Level 1		Level 2		Level 3		Aggregate Fair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds	$	11,041	$	0	$	0	$	11,041
U.S. Treasury securities		14,977		0		0		14,977
Corporate debt securities and commercial paper		0		5,992		0		5,992
Total included in cash and cash equivalents		26,018		5,992		0		32,010
Investments:
U.S. Treasury securities		185,491		0		0		185,491
U.S. Government agencies		0		16,004		0		16,004
Corporate debt securities and commercial paper		0		49,277		0		49,277
Total included in short-term investments		185,491		65,281		0		250,772
Total assets	$	211,509	$	71,273	$	0	$	282,782

	December 31, 2021
	Level 1		Level 2		Level 3		Aggregate Fair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds	$	48,595	$	0	$	0	$	48,595
Total included in cash and cash equivalents		48,595		0		0		48,595
Investments:
U.S. Treasury securities		44,322		0		0		44,322
Corporate debt securities and commercial paper		0		39,026		0		39,026
Total included in short-term investments		44,322		39,026		0		83,348
U.S. Treasury securities included in long-term investments		3,983		0		0		3,983
Total assets	$	96,900	$	39,026	$	0	$	135,926


	June 30, 2022			December 31, 2021
Deferred financing costs	$	430		$	430
Accumulated amortization		(263	)		(191	)
Unamortized deferred financing costs	$	167		$	239


	Number of Awards			Weighted Average Fair Value
Outstanding, December 31, 2021		611,205		$	88.34
Granted		506,331			74.77
Vested		(123,745	)		84.15
Cancelled		(26,334	)		83.21
Outstanding, June 30, 2022		967,457		$	81.91

~~Three and Six Months Ended June 30, 2022~~

~~Common stock options~~

~~2,006,646~~

~~3,680,131~~

~~10,404~~

~~5,697,181~~