Inari Medical, Inc.

Good day, and welcome to the Inari Medical Incorporated third quarter 2023 earnings call. At this time, all participants are in a listen-only mode. At the end of the company's prepared remarks, we will conduct a question-and-answer session. As a reminder, this call is being recorded and will be available on the company's website for replay shortly. And now, I will turn the call over to John Hsu, Vice President of Investor Relations. Please go ahead.

Thank you, operator. Welcome to Inari's conference call to discuss our third quarter 2023 financial performance and the acquisition of Limflow. Joining me on today's call are Drew Hikes, President and Chief Executive Officer, Mitch Hill, Chief Financial Officer, and Dr. Tom Tu, Inari's Chief Medical Officer. This call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including statements related to INARI's estimated full-year 2023 revenue, anticipated closing of the windflow acquisition, potential strategic benefits of the windflow acquisition, expectations regarding our proposed acquisition of windflow, and potential operating performance of windflow, and are based on INARI's current expectations, forecasts, and assumptions, which are subject to inherent uncertainties, risks, and assumptions that are difficult to predict. Actual outcomes and results could differ materially from any results, performance, or achievements expressed or implied by the forward-looking statements due to a number of factors. Please review Inari's most recent filings with the SEC, particularly the risk factors described in Inari's annual report on Form 10-K for the year ended December 31, 2022, and subsequent quarterly reports on Form 10-Q for additional information. Any forward-looking statements provided during this call, including projections for future performance, are based on management's expectations as of today. Inaris undertakes no obligation to update these statements except as required by applicable law. The press releases and slides to accompany this call are available on our website at inarimedical.com. A recording of today's call will be available on Inaris' website by 5 p.m. Pacific time today. With that, I'll turn the call over to Drew. Thank you, John, and thank you, everyone, for joining us today.

We're pleased with our third quarter performance. We generated record revenue and executed crisply across all our growth drivers. First and foremost, growth was driven by continued strength in our core VT business, along with meaningful contributions from our international business and new products. Indeed, our end markets are large and remain highly underpenetrated, and we continue to see healthy procedure volume underlying the VT market. From a profitability perspective, we continue to make steady progress, returning to positive operating income for the first time since Q4 of 2021. We also generated positive net income for the second consecutive quarter. We continue to build on our significant base of clinical evidence, making progress across our three RCTs while publishing the flame study results. As our Q3 results demonstrate, we remain the clear market leader in DTE. and our future growth prospects have never been more compelling. Building on this strength, we are opportunistically broadening our capabilities to address significant new market opportunities via the limb flow acquisition, which we will discuss later in the call. Most importantly, limb flow is aligned with our patient-first philosophy. This will be reflected in a story highlighting the impact limb flow can have on the significant unmet need of no-option patients with chronic limb-threatening ischemia, or CLTI. Back to the quarter. I'd like to start with a summary of our Q3 financial performance. Revenue in Q3 was $126.4 million, up 31% year over year. Our international business generated revenue of $6.5 million in Q3, up 151% year over year, and 26% sequentially from Q2. In addition to our top line performance, we also made steady progress during the quarter on our bottom line, and returned to operating profitability for the first time since 2021. This achievement underscores our commitment to invest strategically in the business while also driving operating leverage, with revenue growing at double the rate of OpEx in the quarter. During Q3, we also made progress across our five growth drivers. Our first growth drivers are expanding our U.S. commercial footprint. We added more headcount in Q3 and remain on track to meet our year-end goals. we continue to generate operating leverage and productivity gains from a more measured pace of territory development. Our broad commercial footprint and methodical approach to expansion results in focused areas of coverage, positioning us well to introduce new products to the market and to execute on our second growth driver, increasing penetration of existing accounts. VTE excellence is a highly differentiated, comprehensive, and repeatable approach to help hospitals establish VTE programs, and drive deeper penetration of our therapies. We remain in the very early innings of market penetration, and we continue to see tremendous value in a programmatic approach to ensure patients are consistently identified, screened, and evaluated by a VTE expert. We continue to make progress and are successfully moving customers along the VTE excellence continuum to more advanced phases of program development. where TAM penetration is three to four times higher than in earlier phases. Our third growth driver is to increase awareness and adoption for NARI's products by building on our broad base of clinical evidence. In the third quarter, we continued advancing both the quality and quantity of our clinical data. First off, as we anticipated, the FLAME study was published on October 17th in the journal Circulation Cardiovascular Interventions. With the recent publication, we expect to see further awareness of this important study and physicians taking notice of the FLAME data, which is already beginning to change practice patterns. We believe the highly positive results of FLAME in extremely sick patients is powerful enough to build physician confidence for intervening on less sick intermediate risk patients, spilling over into a patient population that is five times larger. Turning to an update on our RCTs, Patient enrollment in our PeerList 1 RCT, comparing flow trigger to catheter-directed lytic therapy, remains strong and has eclipsed the three-quarter mark during Q3. We anticipate a data readout in 2024. For PeerList 2, the RCT for intermediate-risk PE patients randomizing treatment with flow trigger to anticoagulation alone, we remain focused on site activations and expect patient enrollment to commence in early 2024. Lastly, We continue to ramp up enrollment in defiance, the RCT comparing clot fever to anticoagulation alone. Executing three simultaneous RCTs, which will collectively enroll up to 1,700 patients, clearly reflects our commitment to generating high-quality clinical data. We will leverage these data to change the standard of care for VTE. Our fourth growth driver is to expand our product portfolio. We continue to make progress across the six products that are in full market release in the second half of 2023. Three of these products, RevCore, InThrill, and ProTree, add direct incremental revenue opportunities. We've gained good initial traction and are receiving excellent clinical feedback across all three products, and we still see tremendous opportunity to keep building awareness and usage across our customer base. The other three products, which are now in FMR, enhance our existing purpose-built toolkits, demonstrating continued innovation in our core VTE portfolios. Those products are T16 Curve and the two products that have most recently entered FMR, ClotTriever XL and the Generation 2 version of ClotTriever Bold. ClotTriever XL extends the treatment range of the ClotTriever platform, which together can now target a range of clot chronicity from the vena cava to the popliteal vein. The Gen 2 ClotTriever Bold delivers the same stellar performance for clot clearance with greater ease of use and procedural efficiency. These six products and FMR are a testament to a robust pipeline and commitment to addressing unmet needs with purpose-built tools. Our last growth driver is expansion into international markets. Q3 marked another quarter of record case and revenue production outside of the U.S. Our performance was driven primarily by increased adoption in Western Europe, complemented by solid case growth in our early-stage markets in Latin America, Canada, and Asia Pacific. We continue to make good progress in both China and Japan and anticipate beginning to treat patients in both of these markets in 2024. We will have more to share on our go-to-market strategies in these two important markets over the coming quarters. Given the spectacular unmet need, we expect our international business could represent greater than 20% of total revenue over time. And now, I'll turn it over to Mitch to discuss our Q3 financial performance in greater detail.