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Inari Medical (NARI) Down 16.9% Despite Q1 Earnings Beat

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Shares of Inari Medical, Inc. (NARI - Free Report) fell 16.9% on May 5, following the company's first-quarter 2022 results.

The company reported first-quarter 2022 net loss per share of 6 cents, narrower than the Zacks Consensus Estimate of 8 cents. The company had reported earnings of 13 cents per share in the year-ago quarter.

Revenue Details

The company reported revenues of $86.8 million, which surged 51.1% from the prior-year quarter. The top line outpaced the Zacks Consensus Estimate by 4.3%. New product introductions and continued U.S. commercial expansion contributed to the improvement.

Q1 Highlights

The company treated 8,800 patients, up 14% on a sequential basis.

Inari Medical, Inc. Price, Consensus and EPS Surprise

Inari Medical, Inc. Price, Consensus and EPS Surprise

Inari Medical, Inc. price-consensus-eps-surprise-chart | Inari Medical, Inc. Quote

Inari Medical unveiled Intri24 — an introducer sheath created to optimize the FlowTriever procedure. Intri24 has become the latest device to be added to the company’s FlowTriever system of purpose-built tools, all for a single price.

Margins

Gross profit in the reported quarter was $76.8 million, up 45.5% year over year. As a percentage of revenues, gross margin in the quarter was 88.5%, down 340 basis points (bps).

Research and development expenses were $16.1 million, up 97.7% from the year-ago quarter. Meanwhile, selling, general and administrative expenses amounted to $63.7 million, up 72.7% on a year-over-year basis.

Operating loss totaled $3.1 million against the year-ago quarter’s operating income of $7.7 million.

Financial Position

The company exited the first quarter with cash, cash equivalents and short-term investments of $338.7 million, up from $176.1 million on a sequential basis.

Net cash provided by operating activities at the end of the first quarter was $9.1 million, compared with $8.8 million in the prior-year quarter.

2022 Revenue Outlook Revised

For 2022, the company projects revenues in the range of $360 million to $370 million (up from the previously guided range of $350-$360 million). The Zacks Consensus Estimate for the same is pegged at $358.2 million.

Our Take

Inari Medical exited the first quarter on a strong note, wherein both earnings and revenues beat the consensus mark. Apart from treating a large number of patients in the quarter under review, the company made substantial progress on all of its growth drivers.

However, the incurrence of operating loss remains a concern. Contraction in gross margin is a woe.

Zacks Rank

Currently, Inari Medical carries a Zacks Rank #3 (Hold).

Key Picks

Some better-ranked stocks in the broader medical space that have announced quarterly results are Omnicell, Inc. (OMCL - Free Report) , UnitedHealth Group Incorporated (UNH - Free Report) and Alkermes plc (ALKS - Free Report) .

Omnicell, carrying a Zacks Rank #2 (Buy), reported first-quarter 2022 adjusted EPS of 83 cents, which beat the Zacks Consensus Estimate by 16.9%. Revenues of $318.8 million outpaced the consensus mark by 0.7%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Omnicell has an estimated long-term growth rate of 16%. OMCL's earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 13.4%.

UnitedHealth, carrying a Zacks Rank #2, reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 1.9%.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.7%.

Alkermes reported first-quarter 2022 adjusted EPS of 12 cents, which beat the Zacks Consensus Estimate of a penny. First-quarter revenues of $278.6 million outpaced the Zacks Consensus Estimate by 6.2%. It currently carries a Zacks Rank #2.

Alkermes has an estimated long-term growth rate of 25.1%. ALKS' earnings surpassed estimates in each of the trailing four quarters, the average surprise being 350.5%.