(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

—

—

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

Options exercised for common stock

167,102

—

109

—

—

109

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

43,643

—

(1,224
)

—

—

(1,224
)
Shares issued under Employee
  Stock Purchase Plan

78,707

—

4,995

—

—

4,995

Share-based compensation expense

—

—

7,356

—

—

7,356

Other comprehensive income

—

—

—

238

—

238

Net loss

—

—

—

—

(10,153
)

(10,153
)
Balance, September 30, 2022

53,595,277

$
53

$
457,043

$
(945
)

$
(41,052
)

$
415,099

(unaudited)

Common Stock

Additional Paid In

Accumulated Other Comprehensive

Accumulated

Total
Stockholders'

Shares

Amount

Capital

Income (Loss)

Deficit

Equity

Balance, December 31, 2020

49,251,614

$
49

$
227,624

$
4

$
(27,423
)

$
200,254

Options exercised for
  common stock

296,019

1

380

—

—

381

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

Options exercised for common stock

150,662

—

159

—

—

159

Shares issued under Employee
  Stock Purchase Plan

48,168

—

3,676

—

—

3,676

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

116,931

—

(842
)

—

—

(842
)
Share-based compensation expense

—

—

12,499

—

—

12,499

Other comprehensive income (loss)

—

—

—

(139
)

—

(139
)
Net loss

—

—

—

—

(2,804
)

(2,804
)
Balance, September 30, 2021

50,144,590

$
50

$
253,256

$
(246
)

$
(18,690
)

$
234,370

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 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 COVID-19 pandemic may continue to negatively impact the Company's 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 ~~September~~June 30, ~~2022,~~2023 and the condensed consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 are unaudited. The consolidated balance sheet as of December 31, 2022 included herein was derived from the audited consolidated financial statements as of that date. 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 ~~September~~June 30, ~~2022~~2023 and its consolidated results of operations and cash flows for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~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 ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 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 included herein was derived from the audited 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 filed on February 23,~~ 2022.

~~Principles of Consolidation~~

~~The condensed consolidated financial statements include the Company and its wholly owned subsidiaries. All 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"~~(“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.

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

Revenue Recognition

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

Table of Contents

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~~representatives hand-deliver products directly to the hospitals, control of the products transfers to the customers upon such ~~hand~~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, discounts, 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 discounts, 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 ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company recorded $~~987,000~~$1,246,000 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:~~

follows:

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

ClotTriever

31
%

30
%

32
%

33
%
FlowTriever

69
%

70
%

68
%

67
%


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
ClotTriever and other systems	34	%	33	%	34	%	32	%
FlowTriever system	66	%	67	%	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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
United States	$	113,802	$	90,933	$	225,648	$	175,987
International	5,203		1,811		9,524		3,509
Total revenue	$	119,005	$	92,744	$	235,172	$	179,496

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 expense recognized was $91,000 and $97,000 during the three months ended

Table of Contents

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2023 and 2022, respectively, and $354,000 and $209,000 for the six months ended June 30, 2023 and 2022, respectively.

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~~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 ~~September~~June 30, 2023 and December 31, 2022, total other investments of $~~5.7~~$8.8 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 June 30, 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 ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):


	June 30, 2023
	Level 1		Level 2		Level 3		Aggregate Fair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds	$	20,450	$	—	$	—	$	20,450

Corporate debt securities and commercial paper	—		2,992		—		2,992
Total included in cash and cash equivalents	20,450		2,992		—		23,442
Investments:
U.S. Treasury securities	181,987		—		—		181,987
U.S. Government agencies	—		52,500		—		52,500
Corporate debt securities and commercial paper	—		45,209		—		45,209
Total included in short-term investments	181,987		97,709		—		279,696
Total assets	$	202,437	$	100,701	$	—	$	303,138

Table of Contents

September 30, 2022

Level 1

Level 2

Level 3

Aggregate Fair Value

Financial Assets

Cash and cash equivalents:

Money market mutual funds

$
21,283

$
—

$
—

$
21,283

U.S. Treasury securities

3,979

—

—

3,979

Corporate debt securities and commercial paper

—

15,973

—

15,973

Total included in cash and cash equivalents

25,262

15,973

—

41,235

Investments:

U.S. Treasury securities

178,462

—

—

178,462

U.S. Government agencies

—

26,184

—

26,184

Corporate debt securities and commercial paper

—

31,059

—

31,059

Total included in short-term investments

178,462

57,243

—

235,705

Total assets

$
203,724

$
73,216

$
—

$
276,940

December 31, 2021

Level 1

Level 2

Level 3

Aggregate Fair Value

Financial Assets

Cash and cash equivalents:

Money market mutual funds

$
48,595

$
—

$
—

$
48,595

Total included in cash and cash equivalents

48,595

—

—

48,595

Investments:

U.S. Treasury securities

44,322

—

—

44,322

Corporate debt securities and commercial paper

—

39,026

—

39,026

Total included in short-term investments

44,322

39,026

—

83,348

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

3,983

—

—

3,983

Total assets

$
96,900

$
39,026

$
—

$
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 no transfers between Levels 1, 2 or 3 for the periods presented.

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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 ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):

September 30, 2022

Amortized Cost Basis

Unrealized Gain

Unrealized Loss

Fair Value

Financial Assets

Cash and cash equivalents:

Money market mutual funds

$
21,283

$
—

$
—

$
21,283

U.S. Treasury securities

3,979

—

—

3,979

Corporate debt securities and commercial paper

15,936

37

—

15,973

Total included in cash and cash equivalents

41,198

37

—

41,235

Investments:

U.S. Treasury securities

178,353

363

(254
)

178,462

U.S. Government agencies

26,139

45

—

26,184

Corporate debt securities and commercial paper

31,002

84

(27
)

31,059

Total included in short-term investments

235,494

492

(281
)

235,705

Total assets

$
276,692

$
529

$
(281
)

$
276,940

December 31, 2021

Amortized Cost Basis

Unrealized Gain

Unrealized Loss

Fair Value

Financial Assets

Cash and cash equivalents:

Money market mutual funds

$
48,595

$
—

$
—

$
48,595

Total included in cash and cash equivalents

48,595

—

—

48,595

Investments:

U.S. Treasury securities

44,349

—

(27
)

44,322

Corporate debt securities and commercial paper

39,012

14

—

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

—

(10
)

3,983

Total assets

$
135,949

$
14

$
(37
)

$
135,926


	June 30, 2023
	Amortized Cost Basis		Unrealized Gain		Unrealized Loss		Fair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds	$	20,450	$	—	$	—	$	20,450

Corporate debt securities and commercial paper	2,993		—		(1)		2,992
Total included in cash and cash equivalents	23,443		—		(1)		23,442
Investments:
U.S. Treasury securities	181,921		137		(71)		181,987
U.S. Government agencies	52,550		37		(87)		52,500
Corporate debt securities and commercial paper	45,197		55		(43)		45,209
Total included in short-term investments	279,668		229		(201)		279,696
Total assets	$	303,111	$	229	$	(202)	$	303,138

Table of Contents

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements


	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 June 30, 2023, the risk of expected credit losses was not significant.

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

Inventories, net of reserves, ~~as of September 30, 2022 and December 31, 2021 totaling $626,000~~ ~~and $285,000, respectively,~~ consist of the following (in thousands):

September 30,
2022

December 31,
2021

Raw materials

$
11,700

$
5,763

Work-in-process

2,691

1,490

Finished goods

15,279

13,800

$
29,670

$
21,053


	June 30, 2023		December 31, 2022
Raw materials	$	13,893	$	13,943
Work-in-process	4,130		3,396
Finished goods	20,961		15,242
Total inventories, net	$	38,984	$	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):

September 30,
2022

December 31,
2021

Manufacturing equipment

$
12,146

$
7,408

Leasehold improvements

4,932

4,712

Assets in progress

3,446

3,124

Furniture and fixtures

3,998

3,044

Computer hardware

4,592

2,864

Computer software

100

100

Total property and equipment, gross

29,214

21,252

Accumulated depreciation

(8,023
)

(4,781
)
Total property and equipment, net

$
21,191

$
16,471


	June 30, 2023		December 31, 2022
Manufacturing equipment	$	15,464	$	13,585
Leasehold improvements	5,248		5,040
Computer hardware	5,219		5,123
Furniture and fixtures	4,336		4,119
Assets in progress	1,779		2,516
Capitalized software	317		—
Computer software	—		100
Total property and equipment, gross	32,363		30,483
Accumulated depreciation	(11,300)		(8,828)
Total property and equipment, net	$	21,063	$	21,655

Depreciation expense of $~~947,000~~$1,132,000 and $~~648,000~~$970,000 was included in ~~SG&A~~operating expenses and $~~223,000~~$274,000 and $~~172,000~~$226,000 was included in cost of goods sold for the three months ended ~~September~~June 30, 2023 and 2022, ~~and 2021,~~ respectively.

Table of Contents

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Depreciation expense of $~~2,774,000~~$2,226,000 and $~~1,633,000~~$1,827,000 was included in ~~SG&A~~operating expenses and $~~656,000~~$528,000 and $~~475,000~~$433,000 was included in cost of goods sold for the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022, ~~and 2021,~~ respectively.

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 had been located from September 2019 to September 2021. This five-year lease was originally set to expire in~~ ~~September 2024~~ ~~and contained~~ ~~two~~ ~~optional extension periods of~~ ~~five years~~ each. Concurrent with the execution of a new ten-year lease in October 2020 (see below), the Company entered into a termination agreement (as amended) that released the Company from the obligations under the five-year lease effective July 2022 and contained options to extend the lease term for up to three periods of an additional 30 days each, which the Company has exercised as of September 30, 2022. In October 2022, the Company amended the lease agreement to cancel the termination agreement and update the lease termination date to ~~September 2024~~.

~~In October 2020, the Company entered into a~~ ~~ten-year~~ ~~lease for a facility located in Irvine, California (the “Oak Canyon lease”) with~~ ~~two~~ ~~option extension periods of~~ ~~five years~~ ~~each, which the Company has determined that it is 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~~ ROU asset and lease liability ~~respectively. The ROU 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 ROU asset also includes $7.3~~ ~~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 ~~September~~June 30, 2023, the aggregate operating lease ROU assets and lease liabilities were $49.9 million and $32.7 million, respectively, with the weighted average remaining lease term of 18.5 years. As of December 31, 2022, the aggregate operating lease ROU asset and lease ~~liability related to the Oak Canyon lease~~liabilities were $~~47.6~~$50.7 million and $~~28.4~~$32.3 million, respectively, with the weighted average remaining lease term of ~~226~~ ~~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 commenced on 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 and is, therefore, included in the calculation of the ROU asset and lease liability. The lease payment is also indexed to the national consumer price index, which may be adjusted once per calendar year. The Basel lease also requires the Company to maintain a bank guarantee for the benefit of the landlord in the amount of approximately $~~0.2~~ ~~million, which is secured by two letters of credit issued under the Company’s Credit Agreement. The Basel lease has a remaining lease term of~~ ~~117~~ ~~months as of September 30, 2022.~~

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

17.1 years.

As of ~~September~~June 30, ~~2022,~~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~~$852,000 and $~~186,000~~$705,000 for the three months ended ~~September~~June 30, 2023 and 2022, respectively, and ~~2021~~$1,698,000 and $~~2,030,000~~ ~~and $557,000~~$1,419,000 for the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022, ~~and 2021,~~ respectively.

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

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

Operating lease cost

$
1,039

$
331

$
3,139

$
702

Short-term lease cost

147

69

192

142

Variable lease cost

181

116

477

200

Total lease costs

$
1,367

$
516

$
3,808

$
1,044

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Operating lease cost $ 1,139 $ 1,057 $ 2,319 $ 2,100
Short-term lease cost 34 30 63 45
Variable lease cost 247 157 407 296
Total lease costs $ 1,420 $ 1,244 $ 2,789 $ 2,441

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

Year ending December 31:

Amount

Remainder of 2022

$
609

2023

2,471

2024

2,550

2025

2,619

2026

2,693

Thereafter

41,478

Total lease payments

52,420

Less imputed interest

(21,455
)
Total lease liabilities

30,965

Less: lease liabilities - current portion

(588
)
Lease liabilities - noncurrent portion

$
30,377

The following are future minimum lease payments for the lease amendment discussed above, which has not yet commenced and is not included in ROU assets and operating lease liabilities as of September 30, 2022 (in thousands):


Year ending December 31:	Amount		Year ending December 31:	Amount
Remainder of 2022	$	145
2023		758
Remainder of 2023			Remainder of 2023	$	1,747
2024		584	2024	3,554
2025			2025	3,041
2026			2026	2,920
2027			2027	2,985
Thereafter			Thereafter	38,544
Total lease payments	$	1,487	Total lease payments	52,791
Less imputed interest			Less imputed interest	(20,123)
Total lease liabilities			Total lease liabilities	32,668
Less: lease liabilities - current portion			Less: lease liabilities - current portion	(1,583)
Lease liabilities - noncurrent portion			Lease liabilities - noncurrent portion	$	31,085

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

Table of Contents

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

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.

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.

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

Legal Proceedings

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 alternative future use. As of June 30, 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 both the three months ended ~~September~~June 30, 2023 and 2022 and ~~2021 and $87,000~~$59,000 for both the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 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 $~~1,500~~. $1,500. In June 2023, the sublicense agreement was terminated and the Company is no longer required to pay any ongoing administration and royalty fees beginning in July 2023.

The Company recorded royalty expense of $1,500 to cost of goods sold for the three months ended June 30, 2023, and recorded $3,000 and $212,000 for the six months ended June 30, 2023 and 2022, respectively. The Company recorded no royalty expense to cost of goods sold ~~of $1,500~~ ~~and $201,000~~for the three months ended ~~September~~June 30, ~~2022 and 2021, respectively, and $~~2022.

Self-Insured Health Plan

~~215,000~~ ~~and $586,000~~ ~~for the nine months ended September 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 ~~September~~June 30, ~~2022,~~2023, the ~~outstanding balance~~Company's self-insurance liability, inclusive of administrative fees, was ~~approximately~~

Table of Contents

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

$~~1.2~~1.7 million, which ~~was~~is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets.

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 ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, there were no customers which accounted for more than 10% of the Company’s revenue. As of June 30, 2023 and December 31, 2022, there were no customers that accounted for more than 10~~% of the Company’s revenue. As of September 30, 2022 and December 31, 2021, there were~~ no ~~customers that accounted for more than~~ 10%10% of the Company’s accounts receivable.

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

2022.

In early 2023, certain U.S. banks failed 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 the Company does not have any direct exposure to these banks, the Company does maintain its cash and cash equivalents at multiple financial institutions in excess of the current FDIC insurance limits.

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 $~~70,000~~$50,000 and $~~38,000~~$118,000 for the three months ended ~~September~~June 30, 2023 and 2022, respectively, and ~~2021~~$80,000 and $~~262,000~~ ~~and $301,000~~$192,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, which was included in ~~operating~~SG&A expenses on the condensed consolidated statements of operations and comprehensive income (loss). As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, there was no 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~~ to, among other things, increase the ~~Company may borrow loans~~amount available for borrowing to up to a maximum principal amount of $30$40.0 million and increase 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 June 30, 2023 is approximately $38.0 million, comprised ofof: a) 85%90% of eligible accounts receivable, plus b) pledged cash (up to ~~$10~~$10.0 million). ~~There was~~ no ~~principal amount outstanding and no cash was pledged~~

Advances under the ~~Credit Agreement as of September 30, 2022 and December 31, 2021, and the amount available to borrow under the Credit Agreement was approximately $28.0~~ ~~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~~

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~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 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:~~Facility: (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

Table of Contents

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

of outstanding letter of credits; and (b) a fronting fee equal to ~~0.125~~%0.125% per annum on the stated amount of each letter of credit outstanding. As of ~~September~~June 30, ~~2022 ,~~2023, the Company had ~~four~~three letters of credit in the aggregated amount of $~~2.0~~$2.0 million outstanding under the LC Facility. ~~As of December 31, 2021, the Company had~~ ~~two~~ ~~letters of credit in the aggregated amount of $1.8~~ ~~million outstanding under the LC Facility.~~

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 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, bankruptcy and insolvency defaults, material judgment defaults and a change of control default.~~The~~

As of June 30, 2023, there was no principal amount outstanding and no cash was pledged under the Amended Credit Agreement, and the Company was in compliance with its covenant ~~requirements as of September 30, 2022.~~requirement. Obligations under the Credit Agreement are secured by substantially all of the Company’s assets, excluding intellectual property.

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

Common Stock

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.

Accumulated Other Comprehensive Income (Loss)

The Company’s accumulated other comprehensive income (loss) includes $1.1 million loss on foreign currency translation adjustments and $0.1 million of unrealized loss on investments as of June 30, 2023, and $1.0 million loss on foreign currency translation adjustments and $1.8 million of unrealized gain on investments as of December 31, 2022.

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.~~Company’s initial public offering in May 2020 (“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 ~~September~~June 30, ~~2022,~~2023, there were ~~5,696,304~~6,530,991 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

~~Stock Options~~

~~A summary of stock option activities under the 2011 Plan for the nine months ended September 30, 2022 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

(718,297
)

$
0.85

$
0.07

$
54,856

Cancelled

(17,495
)

$
2.34

$
1.41

$
1,342

Outstanding, September 30, 2022

1,838,562

$
1.64

$
1.15

6.38

$
130,529

Vested and exercisable at September 30, 2022

1,449,196

$
1.32

$
0.96

6.26

$
103,352

Vested and expected to vest at September 30, 2022

1,826,633

$
1.63

$
1.14

6.38

$
129,708

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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

During the six months ended June 30, 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 Black-Scholes valuation model, the Company used the simplified method for ~~all share-based payment arrangements recognized,including $780,000~~ ~~and $546,000~~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:



			Six Months Ended June 30, 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~~six months ended ~~September~~June 30, ~~2022 and 2021 and $2.5~~ ~~million and $1.9~~ ~~million for the nine months ended September 30, 2022 and 2021, respectively, related to the Employee Stock Purchase Plan, was~~2023 is as follows ~~(in~~(intrinsic value in thousands):


	Number of Awards	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Intrinsic Value
Outstanding, December 31, 2022	—	$	—	—	$	—
Granted	181,870	$	56.00
Exercised	(270)	$	64.91		$	2
Cancelled	(5,639)	$	56.00
Outstanding, June 30, 2023	175,961	$	56.00	6.50	$	377
Vested and exercisable at June 30, 2023	11,085	$	56.00	6.50	$	24
Vested and expected to vest at June 30, 2023	160,603	$	56.00	6.50	$	344

Table of Contents

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

Cost of goods sold

$
386

$
218

$
1,126

$
597

Research and development

1,051

580

3,143

1,601

Selling, general and administrative

5,919

11,701

16,806

18,741

$
7,356

$
12,499

$
21,075

$
20,939

~~Inari Medical, Inc.~~

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

~~Total compensation costs as of September 30, 2022 related to all non-vested awards to be recognized in future periods was $67.0~~ ~~million and is expected to be recognized over the remaining weighted average period of~~ ~~2.9~~ ~~years.~~

Employee Stock Purchase Plan

In May 2020, the Company adopted the 2020 Employee Stock Purchase Plan (“ESPP”), which ~~became effective on~~was amended and restated in October 2020 by the ~~date the ESPP was adopted by~~Compensation Committee of the Company’s board of directors. 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~~.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 number of shares available for issuance under the ESPP increases automatically on January 1 of each calendar year of the Company beginning in 2021 and ending in 2030, in an amount equal to the lesser of (i) 1% of the aggregate number of outstanding shares of the Company’s common stock on the final day of the immediately preceding calendar year and (ii) such smaller number of shares determined by the Company’s board of directors.

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

Nine Months Ended September 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%


	Six Months Ended June 30,
	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 ~~September~~June 30, ~~2022,~~2023, a total of ~~218,564~~(i) 304,615 shares of common stock, including ~~78,707~~86,051 shares purchased in ~~July 2022,~~January 2023, have been purchased under the ESPP, and ~~a total of~~ ~~1,767,957~~(ii) 2,222,123 shares of common stock are reserved under the ESPP for future purchases, including ~~503,135~~540,217 additional shares, ~~effective~~which were automatically added to the reserve on January 1, 2023 pursuant to the terms of the ESPP.

Stock-based Compensation Expense

Total compensation cost for all share-based payment arrangements recognized, including $1.2 million and $1.0 million for the three months ended June 30, 2023 and 2022, ~~are reserved~~respectively, and $2.2 million and $1.8 million for the six months ended June 30, 2023 and 2022, respectively, of stock-based compensation expense related to the ESPP, was as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Cost of goods sold	$	420	$	375	$	839	$	740
Research and development	1,697		1,113		3,393		2,092
Selling, general and administrative	8,236		5,676		16,460		10,887
	$	10,353	$	7,164	$	20,692	$	13,719

Total compensation costs as of June 30, 2023 related to all non-vested awards to be recognized in future ~~purchases.~~

periods was $84.5 million and is expected to be recognized over the remaining weighted average period of 2.8 years.

Table of Contents

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

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 September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

(Loss) income before income taxes

$
(9,313
)

$
(2,743
)

$
(21,377
)

$
9,004

Provision for income taxes

840

61

2,092

271

Net (loss) income

$
(10,153
)

$
(2,804
)

$
(23,469
)

$
8,733

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

9.0
%

2.2
%

9.8
%

3.0
%


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023			2022
Income (loss) before income taxes	$	3,024	$	(8,935)	$	1,830		$	(12,064)
Provision for income taxes	939		1,252		1,963			1,252
Net income (loss)	$	2,085	$	(10,187)	$	(133)		$	(13,316)
Provision for income taxes as a percentage of income (loss) before income taxes	31.1%		(14.0%)		107.3		%	(10.4		%)

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 historically 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,~~period. In addition, the tax effects of certain significant or unusual items are recognized discretely in the quarter in which ~~is calculated as pre-tax income (loss) excluding unusual and infrequently occurring discrete items.~~they occur. For the ~~nine~~six months ended ~~September~~June 30, ~~2022, we~~2023, the Company calculated the income tax provision using this methodology. For the six months ended June 30, 2022, a discrete effective income tax rate method was used as if the interim year to date period was an annual period. We determined that since normal changes in estimated "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 nine months ended September 30, 2022.

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

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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 ~~September~~June 30, ~~2022,~~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. 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.

Table of Contents

INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

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 $~~1.7~~$2.2 million and $~~0.8~~$2.7 million for the three months ended ~~September~~June 30, 2023 and 2022, respectively, and ~~2021, and $6.2~~$4.9 million and $~~2.6~~$4.4 million for the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022, respectively.

15. NET INCOME (LOSS) PER SHARE

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 ~~2021, respectively. The Company recorded an out-of-period adjustment in the second quarter of 2022 resulting in additional matching contribution expense of $0.8~~ ~~million~~potentially dilutive securities outstanding for the ~~nine months ended September 30, 2022. The out-of-period adjustment was not considered material to~~period. For purposes of the ~~fiscal 2021 or fiscal 2022 annual consolidated financial statements.~~

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

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~15. Net Income (Loss) Per Share~~

The components of net income (loss) per share are as ~~follows:~~

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

Numerator:

Net (loss) income (in thousands)

$
(10,153
)

$
(2,804
)

$
(23,469
)

$
8,733

Denominator:

Weighted average number of common shares
   outstanding - basic

53,491,625

50,001,996

52,552,662

49,664,037

Common stock equivalents from outstanding
   common stock options

—

—

—

2,927,569

Common stock equivalents from unvested RSUs

—

—

—

2,917,867

Common stock equivalents from ESPP

—

—

—

847

Common stock equivalents from restricted stock

—

—

—

741

Weighted average number of common shares
   outstanding - diluted

53,491,625

50,001,996

52,552,662

55,511,061

Net (loss) income per share:

Basic

$
(0.19
)

$
(0.06
)

$
(0.45
)

$
0.18

Diluted

$
(0.19
)

$
(0.06
)

$
(0.45
)

$
0.16

follows (in thousands, except per share amounts):

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Numerator:
Net income (loss) $ 2,085 $ (10,187) $ (133) $ (13,316)
Denominator:
Weighted average number of common shares outstanding - basic 57,207,902 53,183,767 55,988,736 52,075,399
Common stock equivalents from outstanding options 1,159,523 — — —
Common stock equivalents from unvested RSUs 112,249 — — —
Common stock equivalents from ESPP 16,676 — — —
Weighted average number of common shares outstanding - diluted 58,496,350 53,183,767 55,988,736 52,075,399
Net income (loss) per share:
Basic $ 0.04 $ (0.19) $ (0.00) $ (0.26)
Diluted $ 0.04 $ (0.19) $ (0.00) $ (0.26)

The following outstanding potentially dilutive common stock equivalents have been excluded from the calculation of diluted net ~~loss~~income (loss) per share ~~for the three and nine months ended September 30, 2022 and the three months ended September 30, 2021~~ due to their anti-dilutive effect:

Three and Nine Months Ended September 30, 2022

Three Months Ended September 30, 2021

Common stock options

1,838,562

2,732,986

RSUs

3,694,930

2,778,176

Restricted stock subject to future vesting

—

741

5,533,492

5,511,903


	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Common stock options	175,961	2,006,646	1,338,592	2,006,646
RSUs	560,346	3,680,131	2,408,633	3,680,131
ESPP	—	10,404	—	10,404
	736,307	5,697,181	3,747,225	5,697,181

Table of Contents

Item 2. ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 for the year ended December 31, ~~2021.~~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 I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~

~~Overview~~

2022. Please also see the section titled “Cautionary Note Regarding Forward-Looking Statements.”

OVERVIEW

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~~designed for smaller vessels, and our ProTrieve sheath, which is FDA-cleared for removal of thrombus from the ~~quality of life of patients suffering from this disease~~peripheral vasculature through aspiration. During the three months ended June 30, 2023, we released the RevCore thrombectomy catheter, which 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~~an FDA-cleared mechanical thrombectomy ~~system designed to core, capture~~device for venous stent thrombosis, Triever 16 Curve catheter, which is FDA-cleared for PE and ~~remove large~~venous thrombus removal, and ClotTriever Bold catheter, which is FDA-cleared for DVT and the removal of acute and chronic clots from large vessels and is used to treat DVT. The FlowTriever is a large bore catheter-based aspiration and mechanical thrombectomy system designed to remove large clots from large vessels to treat PE. Both systems are designed to eliminatein 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.

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 ~~September~~June 30, ~~2022,~~2023, we had cash, cash equivalents, and short-term investments of ~~$319.2~~$337.5 million, no long-term debt outstanding and an accumulated deficit of ~~$41.1~~$47.0 million.

For the three months ended ~~September~~June 30, ~~2022, the Company~~2023, we generated ~~$96.2~~$119.0 million in revenues with a gross margin of ~~88.5%~~88.4% and net income of $2.1 million, as compared to revenues of $92.7 million with a gross margin of 88.8% and net loss of $10.2 million ~~as compared to revenues of $72.9 million with a gross margin of 90.3% and net loss of $2.8 million~~ for the three months ended ~~September~~June 30, ~~2021.~~

2022.

For the ~~nine~~six months ended ~~September~~June 30, ~~2022, the Company~~2023, we generated ~~$275.7~~$235.2 million in revenues with a gross margin of ~~88.6%~~88.3% and net loss of ~~$23.5~~$0.1 million, as compared to revenues of ~~$193.8~~$179.5 million with a gross margin of ~~91.5%~~88.7% and net ~~income~~loss of ~~$8.7~~$13.3 million for the ~~nine~~six months ended ~~September~~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 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.2022.

Revenue

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 the COVID-19 pandemic~~

~~may continue to negatively impact our 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 and six months ended June 30, 2023 and 2022. We expect our revenue to increase in absolute dollars as we expand our offerings, grow our sales organization and sales territories, add customers, expand the base of physicians that are trained to use our products, expand

Table of Contents

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 September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

ClotTriever

31
%

30
%

32
%

33
%
FlowTriever

69
%

70
%

68
%

67
%

~~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 nine months ended September 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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
ClotTriever and other systems	34	%	33	%	34	%	32	%
FlowTriever system	66	%	67	%	66	%	68	%

RESULTS OF OPERATIONS

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

2022

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 September 30,

2022

%

2021

%

Change $

Revenue

$
96,204

100.0
%

$
72,916

100.0
%

$
23,288

Cost of goods sold

11,064

11.5
%

7,040

9.7
%

4,024

Gross profit

85,140

88.5
%

65,876

90.3
%

19,264

Operating expenses:

Research and development

19,105

19.9
%

12,499

17.1
%

6,606

Selling, general and administrative

75,833

78.8
%

56,104

76.9
%

19,729

Total operating expenses

94,938

98.7
%

68,603

94.0
%

26,335

Income (loss) from operations

(9,798
)

(10.2
%)

(2,727
)

(3.7
%)

(7,071
)
Other income (expense)

Interest income

618

0.6
%

27

0.0
%

591

Interest expense

(74
)

(0.1
%)

(73
)

(0.1
%)

(1
)
Other income (expense)

(59
)

(0.1
%)

30

0.0
%

(89
)
Total other expenses, net

485

0.4
%

(16
)

(0.1
%)

501

Income (loss) before income taxes

$
(9,313
)

(9.8
%)

$
(2,743
)

(3.8
%)

$
(6,570
)


	Three Months Ended June 30,								Change $
	2023		%		2022		%
Revenue	$	119,005	100.0	%	$	92,744	100.0	%	$	26,261
Cost of goods sold	13,844		11.6	%	10,347		11.2	%	3,497
Gross profit	105,161		88.4	%	82,397		88.8	%	22,764
Operating expenses
Research and development	21,085		17.7	%	18,569		20.0	%	2,516
Selling, general and administrative	85,586		71.9	%	73,156		78.9	%	12,430
Total operating expenses	106,671		89.6	%	91,725		98.9	%	14,946
Loss from operations	(1,510)		(1.2)	%	(9,328)		(10.1)	%	7,818
Other income (expense)
Interest income	4,552		3.8	%	214		0.2	%	4,338
Interest expense	(44)		—	%	(73)		(0.1)	%	29
Other income	26		—	%	252		0.3	%	(226)
Total other income	4,534		3.8	%	393		0.4	%	4,141
Income (loss) before income taxes	3,024		2.6	%	(8,935)		(9.7)	%	11,959
Provision for income taxes	939		0.8	%	1,252		1.3	%	(313)
Net income (loss)	$	2,085	1.8	%	$	(10,187)	(11.0)	%	$	12,272

Revenue. Revenue increased ~~$23.3~~$26.3 million, or ~~31.9%~~28.3%, to ~~$96.2~~$119.0 million during the three months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$72.9~~$92.7 million during the three months ended ~~September~~June 30, ~~2021.~~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 ~~$4.0~~$3.5 million, or ~~57.2%~~33.8%, to ~~$11.1~~$13.8 million during the three months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$7.0~~$10.3 million during the three months ended ~~September~~June 30, ~~2021.~~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 ~~September~~June 30, ~~2022~~2023 decreased to ~~88.5%~~88.4%, compared to ~~90.3%~~88.8% for the three months ended ~~September~~June 30, ~~2021,~~2022, primarily due to the increase in 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.

Table of Contents

Research and Development Expenses (“R&D”). R&D expenses increased ~~$6.6~~$2.5 million, or ~~52.9%~~13.5%, to ~~$19.1~~$21.1 million during the three months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$12.5~~$18.6 million during the three months ended ~~September~~June 30, ~~2021.~~2022. The increase in R&D expenses was primarily due to increases of ~~$5.1~~$1.7 million of personnel-related expenses ~~$0.9~~and $1.1 million ~~in materials~~of material and supplies ~~and $0.5~~related expenses, partially offset by a decrease of $0.6 million of ~~clinical and regulatory~~ expenses ~~in support of our growth drivers~~related to ~~develop new products and build the clinical evidence base.~~professional fees.

Selling, General and Administrative Expenses (“SG&A”). SG&A expenses increased ~~$19.7~~$12.4 million, or ~~35.2%~~17.0%, to ~~$75.8~~$85.6 million during the three months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$56.1~~$73.2 million during the three months ended ~~September~~June 30, ~~2021.~~2022. The increase in SG&A costs was primarily due to increases of ~~$12.5~~$13.4 million in personnel-related expenses as a result of increased headcount ~~across our organization~~ and increased commissions due to higher revenue, ~~$2.1~~$0.7 million inof material and supplies related expenses, and $0.6 million of travel and related expenses, ~~$1.5~~partially offset by decreases of $1.7 million in sales and marketing related expenses, ~~$1.5~~$0.4 million inof expenses related to professional fees and ~~$1.1~~$0.3 million ~~in facility related~~of expenses ~~particularly~~ related to ~~our new facility.~~insurance costs.

Interest Income. Interest income increased ~~by $0.6~~$4.3 million to $4.6 million during the three months ended ~~September~~June 30, ~~2022,~~2023, compared to $0.2 million during the three months ended ~~September~~June 30, ~~2021.~~2022. The increase in interest income was primarily due to ~~higher~~an increase in interest ~~rate and higher~~rates as well as an increase in the average ~~cash, cash equivalent and~~balance of our short-term investments ~~balances~~ during the three months ended ~~September~~June 30, ~~2022~~2023 compared to the three months ended ~~September~~June 30, ~~2021.~~2022.

Interest Expense. Interest expense ~~was consistent with $74,000~~decreased to $44,000 during the three months ended ~~September~~June 30, ~~2022,~~2023, compared to $73,000 during the three months ended ~~September~~June 30, ~~2021.~~2022.

Other ~~Income (Expense).~~Income. Other ~~expense~~income of ~~$59,000~~$26,000 and $252,000 for the three months ended ~~September~~June 30, 2023 and June 30, 2022, respectively, consisted primarily of foreign currency transaction ~~losses.~~gains.

Income Taxes. Income taxes decreased $0.3 million to $0.9 million during the three months ended June 30, 2023, compared to $1.3 million during the three months ended June 30, 2022. The decrease in the income taxes primarily relates to an increase in the R&D tax credit and the additional tax benefit of stock compensation recognized during the three months ended June 30, 2023.

Table of Contents

Comparison of the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~

2022

Nine Months Ended September 30,

2022

%

2021

%

Change $

Revenue

$
275,700

100.0
%

$
193,766

100.0
%

$
81,934

Cost of goods sold

31,378

11.4
%

16,477

8.5
%

14,901

Gross profit

244,322

88.6
%

177,289

91.5
%

67,033

Operating expenses:

Research and development

53,809

19.5
%

32,292

16.7
%

21,517

Selling, general and administrative

212,721

77.2
%

135,899

70.1
%

76,822

Total operating expenses

266,530

96.7
%

168,191

86.8
%

98,339

Income from operations

(22,208
)

(8.1
%)

9,098

4.7
%

(31,306
)
Other income (expense)

Interest income

882

0.3
%

130

0.1
%

752

Interest expense

(220
)

(0.1
%)

(220
)

(0.1
%)

—

Other income (expense)

169

0.1
%

(4
)

0.0
%

173

Total other expenses, net

831

0.3
%

(94
)

0.0
%

925

Income (loss) before income taxes

$
(21,377
)

(7.8
%)

$
9,004

4.7
%

$
(30,381
)


	Six Months Ended June 30,								Change $
	2023		%		2022		%
Revenue	$	235,172	100.0	%	$	179,496	100.0	%	$	55,676
Cost of goods sold	27,585		11.7	%	20,314		11.3	%	7,271
Gross profit	207,587		88.3	%	159,182		88.7	%	48,405
Operating expenses
Research and development	43,149		18.3	%	34,704		19.3	%	8,445
Selling, general and administrative	171,286		72.8	%	136,888		76.3	%	34,398
Total operating expenses	214,435		91.1	%	171,592		95.6	%	42,843
Loss from operations	(6,848)		(2.8	%)	(12,410)		(6.9	%)	5,562
Other income (expense)
Interest income	8,697		3.7	%	264		0.1	%	8,433
Interest expense	(84)		—	%	(146)		(0.1	%)	62
Other income	65		—	%	228		0.1	%	(163)
Total other income	8,678		3.7	%	346		0.1	%	8,332
Income (loss) before income taxes	1,830		0.9	%	(12,064)		(6.8	%)	13,894
Provision for income taxes	1,963		0.8	%	1,252		0.7	%	711
Net loss	$	(133)	(0.1	%)	$	(13,316)	(7.4	%)	$	13,183

Revenue. Revenue increased ~~$81.9~~$55.7 million, or ~~42.3%~~31.0%, to ~~$275.7~~$235.2 million during the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$193.8~~$179.5 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~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 ~~$14.9~~$7.3 million, or ~~90.4%~~35.8%, to ~~$31.4~~$27.6 million during the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$16.5~~$20.3 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~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 ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 decreased to ~~88.6%~~88.3%, compared to ~~91.5%~~88.7% for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, primarily due to the increase in 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 expenses increased ~~$21.5~~$8.4 million, or ~~66.6%~~24.3%, to ~~$53.8~~$43.1 million during the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$32.3~~$34.7 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The increase in R&D expenses was primarily due to increases of ~~$15.0~~$5.6 million of personnel-related expenses, ~~$3.7~~$2.4 million ~~in materials~~of material and supplies ~~$1.2~~related expenses, $0.9 million of clinical and regulatory expenses, and ~~$0.9~~$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 $1.0 million of expenses related to professional fees.

Selling, General and Administrative Expenses. SG&A expenses increased ~~$76.8~~$34.4 million, or ~~56.5%~~25.1%, to ~~$212.7~~$171.3 million during the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$135.9~~$136.9 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The increase in SG&A costs was primarily due to increases of ~~$51.3~~$32.4 million in personnel-related expenses as a result of increased headcount ~~across our organization~~ and increased commissions due to higher revenue, ~~$6.9~~$2.1 million in travel and related expenses, ~~$6.3~~and $1.1 million of materials and supplies, partially offset by decreases of $1.3 million in sales and marketing ~~expenses, $5.4 million in professional fees, $3.4 million in facility~~ related expenses ~~particularly~~and $0.6 million of insurance related ~~to our new facility, and $2.3 million in software costs and depreciation~~ expenses.

Table of Contents

Interest Income. Interest income increased ~~by $0.8~~$8.4 million ~~or 578.5%~~ to ~~$0.9~~$8.7 million during the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$0.1~~$0.3 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The increase in interest income was primarily due to ~~higher~~an increase in interest ~~rate and higher~~rates as well as an increase in the average ~~cash, cash equivalent and~~balance of our short-term investments ~~balances~~ during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

Interest Expense. Interest expense ~~was consistent with $220,000~~decreased to $84,000 during the ~~nine~~six months ended ~~September~~June 30, ~~2022 and~~2023, compared to $146,000 during the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

Other ~~income (Expenses)~~income. Other income of ~~$169,000~~$65,000 and $228,000 for the ~~nine~~six months ended ~~September~~June 30, 2023 and June 30, 2022, respectively, consisted primarily of foreign currency transaction gains.

~~Liquidity~~Income Taxes. Income taxes increased $0.7 million to $2.0 million for the six months ended June 30, 2023, compared to $1.3 million during the six months ended June 30, 2022. 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 an increase in the U.S. pre-tax book income for the six months ended June 30, 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 the Follow-On Offering, and revenue from the sale of our products. On May 27, 2020, we completed our IPO and sold 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 and sold 2,300,000 shares of our common stock at $81.00 per share, for net proceeds of approximately $174.4 million, after deducting underwriting discounts and commissions and offering expenses. In September 2020, we entered into a revolving Credit Agreement with Bank of America which provides for loans up to a maximum of $30.0 million. As of ~~September~~June 30, ~~2022,~~2023, we had cash and cash equivalents of ~~$83.5~~$57.8 million and short-term investments in debt securities of ~~$235.7~~$279.7 million. We maintain cash and cash equivalents with financial institutions in excess of insured limits.

In December 2022, we amended the revolving Credit Agreement governing our senior secured revolving credit facility with Bank of America (“the Amended Credit Agreement”) to, among other things, increase the amount available for borrowing to up to a maximum of $40.0 million and ~~an accumulated deficit of $41.1~~increase the optional accordion to $120.0 million. As of ~~September~~June 30, ~~2022,~~2023, we had no principal outstanding under the Amended Credit Agreement and the amount available to borrow was approximately ~~$28.0~~$38.0 million. The Amended Credit Agreement also includes a 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 June 30, 2023, we had three 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 to our condensed consolidated financial statements, which is included in “Part I, Item 1. Condensed Consolidated Financial Statements (Unaudited)” of this report.

Our other short-term and long-term material cash requirements, from known contractual obligations as of June 30, 2023, include operating lease liabilities, uncertain tax positions and royalty obligations from license and sublicense agreements, as discussed in note 7. Commitments and Contingencies and note 13. Income Taxes to our condensed consolidated financial statements section of this report, which is included in “Part I, Item 1. Condensed Consolidated Financial Statements (Unaudited)” of this report.

Based on our current planned operations, we ~~expect~~anticipate that our cash and cash equivalents, short-term investments and available borrowings ~~along with cash flow from operations,~~under our Amended Credit Agreement will be ~~adequate us~~sufficient to fund these cash requirements and our operating expenses for at least the next 12 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 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, 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

Table of Contents

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.

CASH FLOWS

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

Nine Months Ended September 30,

2022

2021

Net cash provided by (used in):

Operating activities

$
(25,227
)

$
10,479

Investing activities

(161,969
)

(48,365
)
Financing activities

178,827

4,693

Effect of foreign exchange rate on cash and cash equivalents

(855
)

(266
)
Net decrease in cash and cash equivalents

$
(9,224
)

$
(33,459
)

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


	Six Months Ended June 30,
	2023		2022
Net cash provided by (used in):
Operating activities	$	7,747	$	(12,161)
Investing activities	(10,123)		(175,371)
Financing activities	114		174,947
Effect of foreign exchange rate changes on cash and cash equivalents	(123)		(443)
Net decrease in cash and cash equivalents	$	(2,385)	$	(13,028)

Net cash used in operating activities

Net cash provided by operating activities for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was ~~$25.2~~$7.7 million, consisting primarily of net loss of ~~$23.5~~$0.1 million and a decrease in net operating assets of ~~$28.5~~$9.9 million, offset by non-cash charges of ~~$26.8~~$17.8 million. The decrease in net operating assets was primarily due to a decrease in operating lease liabilities of $0.7 million, a decrease in lease prepayments for lessor's owned leasehold improvements of $0.5 million, and a decrease in accounts payable of $0.4 million due to the timing of payments and growth of our operations, coupled with increases in inventories of $6.3 million and accounts receivable of $4.6 million, offset by an increase in accrued liabilities of $2.2 million and a decrease in prepaid and other assets of $0.4 million. The non-cash charges primarily consisted of stock-based compensation expense of $20.7 million, amortization of the right-of-use assets of $2.4 million and depreciation of $2.8 million, partially offset by amortization of premium and discount on marketable securities of $8.1 million.

Net cash used in operating activities for the six months ended June 30, 2022 was $12.2 million, consisting primarily of net loss of $13.3 million and a decrease in net operating assets of $16.2 million, offset by non-cash charges of $17.3 million. The decrease in net operating assets was primarily due to decreases in accounts payable and accrued liabilities of ~~$1.0~~$1.1 million due to timing of payments and growth of our operations, lease prepayments for lessor's owned leasehold improvements of ~~$4.5~~$3.0 million and a decrease in operating lease liabilities of ~~$0.6~~$0.5 million, coupled with increases in inventories of $5.7 million and accounts receivable of ~~$12.2~~$7.0 million, ~~inventories of $8.7 million, and~~offset by a decrease in prepaid and other assets of ~~$1.5~~$1.0 million. The non-cash charges primarily consisted of ~~$21.1~~$13.7 million in stock-based compensation expense, ~~$3.4~~$2.3 million in depreciation, and ~~$1.8~~$1.2 million in amortization of the right-of-use assets.

Net cash ~~provided by operating~~used in investing activities for the nine months ended September 30, 2021 was $10.5 million, consisting primarily of net income of $8.7 million and non-cash charges of $23.7 million, offset by an increase in net operating assets of $21.9 million. The increase in net operating assets was primarily due to increases in accounts receivable of $10.9 million and inventories of $8.9 million to support the growth of our operations, an increase in prepaid and other assets of $4.5 million primarily from prepaid insurance, which were partially offset by increases in accounts payable of $2.0 million and accrued liabilities of $12.9 million due to timing of payments and growth of our operations, lease prepayments for lessor's owned leasehold improvements of $12.0 million and a decrease in operating lease liabilities of $0.6 million. The non-cash charges primarily consisted of $20.9 million in stock-based compensation expense, $2.1 million in depreciation, and $0.5 million in amortization of the right-of-use assets.

~~Net Cash Used in Investing Activities~~

Net cash used in investing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was ~~$162.0~~$10.1 million, consisting of ~~$332.1~~$284.2 million purchases of short-term investments, ~~$5.7 million purchases of other investments, and $8.2~~$2.2 million purchases of property and equipment, and $0.6 million purchases of other investments, offset by maturities of short-term investments of ~~$184.0~~$276.8 million.

Net cash used in investing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 was ~~$48.4~~$175.4 million, consisting of ~~$105.4~~$230.8 million purchases of ~~marketable securities coupled with $10.9~~short-term investments, $5.9 million purchases of property and equipment, and $5.7 million purchases of other investments, offset by maturities of short-term investments of ~~$68.0~~$67.0 million.

Net ~~Cash Provided~~cash provided by ~~Financing Activities~~

financing activities

Net cash provided by financing activities in the ~~nine~~six months ended ~~September~~June 30, 2023 was $0.1 million, consisting of $4.2 million proceeds from the issuance of common stock under our employee stock purchase plan and

Table of Contents

$0.4 million of proceeds from exercise of stock options, offset by $4.5 million of tax payments related to vested restricted stock units (“RSUs”).

Net cash provided by financing activities in the six months ended June 30, 2022 was ~~$178.8~~$174.9 million, consisting of $174.4 million net proceeds from the issuance of common stock in the ~~Follow-On Offering,~~public offering, net of issuance costs of $11.9 million, ~~$8.4~~$3.4 million proceeds from the issuance of common stock under our employee stock purchase plan and ~~$0.6~~$0.5 million of proceeds from exercise of stock options, offset by ~~$4.6~~$3.4 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 nine months ended September 30, 2021 was $4.7 million, consisting of proceeds of $5.6 million in proceeds from the issuance of common stock under our employee stock purchase plan and $0.7 million of proceeds from exercise of stock options, offset by $1.6 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 in our critical accounting policies during the six months ended June 30, 2023, as compared to ~~our quantitative and qualitative disclosures about market risk from those~~the critical accounting policies disclosed in ~~“Part II, Item 7. Quantitative~~Management's Discussion and ~~Qualitative Disclosures about Market Risk”~~Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022, filed with the SEC on February 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 Securities Exchange Act of 1934, as amended, or the Exchange Act), as of ~~September~~June 30, ~~2022.~~2023. Based on such evaluation, our Principal Executive ~~Office~~Officer and Principal Financial Officer concluded that, as of ~~September~~June 30, ~~2022,~~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~~within the time ~~period~~periods 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 Exchange Act is accumulated and communicated to our ~~management.~~

~~Changes in internal control over financial reporting~~

During the three months ended September 30, 2022, 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 likelymanagement as appropriate to ~~materially affect, our internal control over financial reporting.~~

~~Inherent limitations on effectiveness of controls and procedures~~

allow timely decisions regarding required disclosures. 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.

Changes in internal control over financial reporting

During the quarter ended June 30, 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.

Table of Contents

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

None.

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

DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. ~~Mine Safety Disclosures.~~

MINE SAFETY DISCLOSURES

Not applicable.

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

In connection with grants made under the 2011 Equity Incentive Plan for Restricted Stock Units (“RSUs”), certain RSUs were vested in March 2023 and will be distributed in installments to the employees. In November 2022, to ensure that we would receive the funds required to pay all tax obligations due in connection with the distribution and settlement of these previously-vested RSUs on a timely basis, Mr. Bill Hoffman, a member of our Board of Directors, Mr. Andrew Hykes, Chief Executive Officer and President, and Dr. Thomas Tu, Chief Medical Officer, each entered into an agreement to permit us to sell shares of our common stock sufficient to satisfy such taxes. We have determined that we will not carry out the instruction with respect to Mr. Hoffman after he informed us that he will wire sufficient funds to us in advance of the remaining August 15, 2023 and November 15, 2023 distributions so that we can remit such taxes on his behalf to the relevant taxing authorities. As such, we do not intend to sell shares to cover Mr. Hoffman’s tax obligations. With respect to Mr. Hykes and Dr. Tu, we intend to sell the required shares, approximately 37,000 and 25,000 respectively, to cover the applicable tax obligations for the August 2023 distribution in accordance with the terms of their previous instructions. We would expect similar sales on behalf of Mr. Hykes and Dr. Tu in accordance with the November 2023 distribution.

No officer or director has entered into, modified or terminated a trading plan pursuant to 10(b)(5)-1(c) of the Securities Exchange Act of 1934, as amended, or any other non-rule 10b5-1 trading plan.

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
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

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.

Table of Contents

SIGNATURES

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: ~~November~~August 2, ~~2022~~ 2023	By:	/s/ ~~William Hoffman~~Andrew Hykes
	Andrew Hykes		~~William Hoffman~~
			Chief Executive Officer and President (Principal Executive Officer)

Date: ~~November~~August 2, ~~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)


	September 30, 2022			December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	83,528		$	92,752
Short-term investments in debt securities		235,705			83,348
Accounts receivable, net		54,059			42,351
Inventories, net		29,670			21,053
Prepaid expenses and other current assets		7,609			5,694
Total current assets		410,571			245,198
Property and equipment, net		21,191			16,471
Operating lease right-of-use assets		49,951			44,909
Deposits and other assets		6,106			981
Long-term investments in debt securities		—			3,983
Total assets	$	487,819		$	311,542
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	6,035		$	6,541
Payroll-related accruals		28,052			24,433
Accrued expenses and other current liabilities		7,668			10,737
Operating lease liabilities, current portion		588			802
Total current liabilities		42,343			42,513
Operating lease liabilities, noncurrent portion		30,377			28,404
Other long-term liability		—			1,416
Total liabilities		72,720			72,333
Commitments and contingencies (Note 7)
Stockholders' equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of September 30, 2022 and December 31, 2021		—			—
Common stock, $0.001 par value, 300,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 53,595,277 and 50,313,452 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		53			50
Additional paid in capital		457,043			257,144
Accumulated other comprehensive loss		(945	)		(402	)
Accumulated deficit		(41,052	)		(17,583	)
Total stockholders' equity		415,099			239,209
Total liabilities and stockholders' equity	$	487,819		$	311,542


	June 30, 2023		December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	57,837	$	60,222
Short-term investments in debt securities	279,696		266,179
Accounts receivable, net	63,128		58,611
Inventories, net	38,984		32,581
Prepaid expenses and other current assets	4,972		5,312
Total current assets	444,617		422,905
Property and equipment, net	21,063		21,655
Operating lease right-of-use assets	49,857		50,703
Deposits and other assets	9,431		8,889

Total assets	$	524,968	$	504,152
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	7,240	$	7,659
Payroll-related accruals	38,290		38,955
Accrued expenses and other current liabilities	11,125		8,249
Operating lease liabilities, current portion	1,583		1,311
Total current liabilities	58,238		56,174
Operating lease liabilities, noncurrent portion	31,085		30,976

Total liabilities	89,323		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 June 30, 2023 and December 31, 2022	—		—
Common stock, $0.001 par value, 300,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 57,266,455 and 54,021,656 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	57		54
Additional paid in capital	483,752		462,949
Accumulated other comprehensive (loss) income	(1,181)		849
Accumulated deficit	(46,983)		(46,850)
Total stockholders' equity	435,645		417,002
Total liabilities and stockholders' equity	$	524,968	$	504,152


	Nine Months Ended September 30,
	2022			2021
Cash flows from operating activities
Net (loss) income	$	(23,469	)	$	8,733
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation		3,430			2,108
Amortization of deferred financing costs		108			108
Amortization of right-of-use assets		1,799			537
Share-based compensation expense		21,075			20,939
Allowance for credit losses, net		341			(22	)
Loss on disposal of fixed assets		23			—
Changes in:
Accounts receivable		(12,220	)		(10,898	)
Inventories		(8,706	)		(8,924	)
Prepaid expenses, deposits and other assets		(1,537	)		(4,525	)
Accounts payable		(441	)		2,042
Payroll-related accruals, accrued expenses and other liabilities		(562	)		12,919
Operating lease liabilities		(565	)		(574	)
Lease prepayments for lessor's owned leasehold improvements		(4,503	)		(11,964	)
Net cash (used in) provided by operating activities		(25,227	)		10,479
Cash flows from investing activities
Purchases of property and equipment		(8,173	)		(10,927	)
Purchases of marketable securities		(332,103	)		(105,438	)
Maturities of marketable securities		184,000			68,000
Purchases of other investments		(5,693	)		—
Net cash used in investing activities		(161,969	)		(48,365	)
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		8,422			5,558
Proceeds from exercise of stock options		610			732
Payment of taxes related to vested restricted stock units		(4,599	)		(1,597	)
Net cash provided by financing activities		178,827			4,693
Effect of foreign exchange rate on cash and cash equivalents		(855	)		(266	)
Net decrease in cash		(9,224	)		(33,459	)
Cash and cash equivalents beginning of period		92,752			114,617
Cash and cash equivalents end of period	$	83,528		$	81,158

Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	3,085		$	271
Cash paid for interest	$	112		$	113
Noncash investing and financing:
Lease liabilities arising from obtaining new right-of-use assets	$	2,334		$	28,648


	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities
Net loss	$	(133)	$	(13,316)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation	2,754		2,260
Amortization of deferred financing costs	20		72
Amortization of right-of-use assets	2,359		1,225
Share-based compensation expense	20,692		13,719
Allowance for credit losses, net	63		66
Loss on disposal of fixed assets	30		—
Amortization of premium and discount on marketable securities	(8,112)		—
Changes in:
Accounts receivable	(4,561)		(6,960)
Inventories	(6,334)		(5,676)
Prepaid expenses, deposits and other assets	352		1,072
Accounts payable	(417)		(1,760)
Payroll-related accruals, accrued expenses and other liabilities	2,167		650
Operating lease liabilities	(675)		(544)
Lease prepayments for lessor's owned leasehold improvements	(458)		(2,969)
Net cash provided by (used in) operating activities	7,747		(12,161)
Cash flows from investing activities
Purchases of property and equipment	(2,193)		(5,864)
Purchases of marketable securities	(284,165)		(230,814)
Maturities of marketable securities	276,800		67,000
Purchases of other investments	(565)		(5,693)
Net cash used in investing activities	(10,123)		(175,371)
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	440		501
Payment of taxes related to vested restricted stock units	(4,498)		(3,375)
Net cash provided by financing activities	114		174,947
Effect of foreign exchange rate changes on cash and cash equivalents	(123)		(443)
Net decrease in cash and cash equivalents	(2,385)		(13,028)
Cash and cash equivalents beginning of period	60,222		92,752
Cash and cash equivalents end of period	$	57,837	$	79,724

Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	1,437	$	2,297
Cash paid for interest	$	65	$	75
Noncash investing and financing:
Lease liabilities arising from obtaining new right-of-use assets	$	1,030	$	—


☒			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


		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	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2022
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2428
Item 4.	Controls and Procedures	2428
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	2629
Item 1A.	Risk Factors	2629
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2629
Item 3.	Defaults Upon Senior Securities	2629
Item 4.	Mine Safety Disclosures	2629
Item 5.	Other Information	2629
Item 6.	Exhibits	2730
Signatures		2831


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021

Revenue	$	96,204		$	72,916		$	275,700		$	193,766
Cost of goods sold		11,064			7,040			31,378			16,477
Gross profit		85,140			65,876			244,322			177,289
Operating expenses
Research and development		19,105			12,499			53,809			32,292
Selling, general and administrative		75,833			56,104			212,721			135,899
Total operating expenses		94,938			68,603			266,530			168,191
(Loss) income from operations		(9,798	)		(2,727	)		(22,208	)		9,098
Other income (expense)
Interest income		618			27			882			130
Interest expense		(74	)		(73	)		(220	)		(220	)
Other income (expense)		(59	)		30			169			(4	)
Total other income (expenses)		485			(16	)		831			(94	)
(Loss) income before income taxes		(9,313	)		(2,743	)		(21,377	)		9,004
Provision for income taxes		840			61			2,092			271
Net (loss) income	$	(10,153	)	$	(2,804	)	$	(23,469	)	$	8,733
Other comprehensive income (loss)
Foreign currency translation adjustments		(406	)		(146	)		(814	)		(269	)
Unrealized gain on available-for-sale debt securities		644			7			271			19
Total other comprehensive income (loss)		238			(139	)		(543	)		(250	)
Comprehensive (loss) income	$	(9,915	)	$	(2,943	)	$	(24,012	)	$	8,483
Net (loss) income per share
Basic	$	(0.19	)	$	(0.06	)	$	(0.45	)	$	0.18
Diluted	$	(0.19	)	$	(0.06	)	$	(0.45	)	$	0.16
Weighted average common shares used to compute net (loss) income per share
Basic		53,491,625			50,001,996			52,552,662			49,664,037
Diluted		53,491,625			50,001,996			52,552,662			55,511,061


	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			—			—			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
Options exercised for common stock		167,102		—		109			—			—			109
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for taxes		43,643		—		(1,224	)		—			—			(1,224	)
Shares issued under Employee Stock Purchase Plan		78,707		—		4,995			—			—			4,995
Share-based compensation expense		—		—		7,356			—			—			7,356
Other comprehensive income		—		—		—			238			—			238
Net loss		—		—		—			—			(10,153	)		(10,153	)
Balance, September 30, 2022		53,595,277	$	53	$	457,043		$	(945	)	$	(41,052	)	$	415,099


	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
Options exercised for common stock	81,712	—		214		—		—		214
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for taxes	101,027	—		(2,569)		—		—		(2,569)
Share-based compensation expense	—	—		10,353		—		—		10,353
Other comprehensive loss	—	—		—		(1,174)		—		(1,174)
Net income	—	—		—		—		2,085		2,085
Balance, June 30, 2023	57,266,455	$	57	$	483,752	$	(1,181)	$	(46,983)	$	435,645


	September 30, 2022
	Level 1		Level 2		Level 3		Aggregate Fair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds	$	21,283	$	—	$	—	$	21,283
U.S. Treasury securities		3,979		—		—		3,979
Corporate debt securities and commercial paper		—		15,973		—		15,973
Total included in cash and cash equivalents		25,262		15,973		—		41,235
Investments:
U.S. Treasury securities		178,462		—		—		178,462
U.S. Government agencies		—		26,184		—		26,184
Corporate debt securities and commercial paper		—		31,059		—		31,059
Total included in short-term investments		178,462		57,243		—		235,705
Total assets	$	203,724	$	73,216	$	—	$	276,940

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


	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		(718,297	)	$	0.85	$	0.07			$	54,856
Cancelled		(17,495	)	$	2.34	$	1.41			$	1,342
Outstanding, September 30, 2022		1,838,562		$	1.64	$	1.15		6.38	$	130,529
Vested and exercisable at September 30, 2022		1,449,196		$	1.32	$	0.96		6.26	$	103,352
Vested and expected to vest at September 30, 2022		1,826,633		$	1.63	$	1.14		6.38	$	129,708


	Three and Nine Months Ended September 30, 2022		Three Months Ended September 30, 2021
Common stock options		1,838,562		2,732,986
RSUs		3,694,930		2,778,176
Restricted stock subject to future vesting		—		741
		5,533,492		5,511,903