6. Inari Medical, Inc. (NASDAQ:NARI)
YTD Performance: 56.57%
Number of Hedge Fund Holders: 27
Inari Medical, Inc. (NASDAQ:NARI) is a medical device company that develops, manufactures, and markets devices for the interventional treatment of venous diseases. Its products primarily comprise FlowTriever and ClotTriever systems, which are used to treat venous thromboembolism (VTE), deep vein thrombosis (DVT), and pulmonary embolism (PE). The company also has an InThrill system that removes emboli and thrombi from the peripheral vasculature and the LimFlow system for chronic limb-threatening ischemia, in addition to other offerings. Inari Medical, Inc.’s (NASDAQ:NARI) stock is gaining value after a buyout deal from Stryker, which announced that it is buying Inari Medical, Inc. (NASDAQ:NARI) for $4.9 billion at $80 per share in cash.
Inari Medical, Inc. (NASDAQ:NARI) has strong financials. It reported a revenue of $153.4 million in fiscal Q3 2024, up 21.4% compared to $126.4 million in fiscal Q3 2023. Gross profit was $133.5 million for fiscal Q3 2024, compared to $111.9 million in the same quarter last year. This growth was attributed to an expansion in its sales territories, increased adoption of its procedures, the opening of new accounts, global commercial expansion, and the introduction of new products.
Baron Discovery Fund stated the following regarding Inari Medical, Inc. (NASDAQ:NARI) in its Q3 2024 investor letter:
“We added to our position in Inari Medical, Inc. (NASDAQ:NARI) in the quarter at what we believe are attractive valuations for a market leading medical device company. Inari offers catheter-based devices to remove clots caused by venous thromboembolism (VTE). VTE is a disease state that manifests as deep vein thrombosis (DVT), in which a clot cuts off blood flow in a deep vein (usually in the leg), and as pulmonary embolism (PE), when the clot in the leg breaks off and circulates to lodge in the blood vessels that supply the lungs. Despite beating its second quarter earnings and raising full-year guidance, Inari shares have been pressured after the release of competitor Penumbra, Inc.’s new product for DVT treatment. Both companies have very good products for DVT. We believe that there are huge opportunities for both companies to grow in DVT (by displacing other treatments), and Inari, in particular, has even bigger opportunities in PE (which it dominates) also by displacing other treatments.
PE and DVT are each markets worth about $3 billion per year (a $6 billion total market opportunity). Right now, about 80% receive just blood thinners which do nothing for existing clots, while only 20% receive any sort of more in-depth intervention. And then of this 20%, still a third are on thrombolytics, which has a high risk of bleeding and require an ICU stay for monitoring. Inari is working on studies that it believes will show superiority of its devices to using lytics or blood thinners. Its first PE study (superiority of an Inari device to using lytics) is due to read out in the fourth quarter of 2024. It has another PE study which should read out over the next couple of years that should help open up the remaining 80% of the PE market (superiority of an Inari device versus using blood thinners). In addition, Inari is at various stages of launching multiple new products (for other venous and arterial blockage conditions) which could unlock nearly $4 billion in additional addressable market opportunities. And it is launching its products in foreign markets as well. In other words, although a portion of its markets are facing increased competition, we believe there is a huge amount of overall growth opportunity that is wide open for Inari, and the stock is trading at a valuation that currently does not reflect these opportunities.”
