Inari Medical Inc

NASDAQ:NARI

Earnings Call Transcript 2022-Q2

[Operator]

Good day, and thank you for standing by. Welcome to the Inari Medical Inc. Second Quarter Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Caroline Corner, Investor Relations. Please go ahead.

[Caroline Corner, IR]

Thank you, operator. Welcome to Inari second quarter 2022 earnings call. Joining me on today's call are Bill Hoffman, President and Chief Executive Officer; Drew Hykes, Chief Operating Officer; and Mitch Hill, Chief Financial Officer.

This call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical facts should be considered forward-looking statements, including statements regarding the markets in which Inari operates, trends and expectations for Inari's products and technology, trends and demand for Inari's products, Inari's expected financial performance, expenses and position in the market and the impact of COVID-19 on Inari's operations and Inari's customers operations.

These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results, performance or achievements to differ materially from any results, performance or achievements expressed or implied by the forward-looking statements.

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, 2021 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. Inari undertakes no obligation to update these statements except as required by applicable law. Inari's press release with second quarter 2022 results is available on Inari's website www.inarimedical.com under the Investors section and includes additional details about Inari's financial results. Inari's website also has the latest SEC filings which you are encouraged to review.

A recording of today's call will be available on Inari's website by 5:00 PM Pacific Time today.

Now, I would like to turn the call over to Bill for his comments on second quarter 2022 business highlights.

[Bill Hoffman, President and CEO]

Thank you, Caroline, and thank you everyone for joining us today.

After nearly 8 years as CEO of Inari Medical, I'm pleased to announce the transition of the Chief Executive Officer role and responsibilities to Drew Hykes effective January 1, 2023. I have loved every second of my time on this mission and with this team and I have no professional plan beyond continued service on the Inari Medical Board of Directors. I do, however, have a lot of work to do on my own personal bucket list. Drew of course is well known to all of you as he has participated in all of Inari's public facing communication since we began preparing for our IPO in October of 2019. In fact, Drew has shared in all key decisions at Inari Medical since his arrival in 2017. He, Tom, Mitch and I have been in lockstep not only in our decisions but equally importantly in our commitment to our mission and to our plan. Drew is fully prepared for and capable of assuming the CEO role, and I am personally as excited for him as I am enthusiastic about Inari's future under his leadership.

You'll hear from Drew shortly about the progress we've made recently on all five of our growth drivers, but I'd like to share with you now as always, a patient story that conveys the extraordinary impact of our products and our people on the lives of our patients and their families.

Couple of months ago, a 14-year-old boy, a competitive athlete in excellent physical condition collapsed while playing basketball with friends. He was rushed by ambulance to a nearby hospital with multiple generations of family arriving shortly thereafter. Imaging showed large blood clots in both his left and right lungs. His physicians used FlowTriever along the FlowSaver towards 12 times until all of the clot was removed from his lungs. Procedure was completed in 52 minutes, his pulmonary artery pressures, heart rate and breathing returned to near normal levels immediately and he was discharged from the hospital within 24 hours.

This story is remarkable for several reasons. First, syncope or fainting suggests a high risk presentation of PE and it carries a mortality rate of up to 50%. Second, any clot remaining in the lungs of PE survivors conveys terrible long-term consequences, including persistent right heart strain, shortness of breath, exercise and basic functional limitations and poor quality of life scores, removing all of the clot matters. And this young man has no residual clot. He's not only alive, but the trajectory of his hopefully very long life is changed in the most beautiful ways. His entire family openly wept upon hearing the good news about the procedure and seeing the pictures of the clot removed from his lungs. We remain committed to ideas bigger than ourselves and more important than business.

I'd like now to turn our attention to our Q2 financial performance. Our revenue in Q2 was $92.7 million, up $29.3 million or 46% from the same quarter last year and up $5.9 million or 7% from Q1 of 2022. Our core business was strong as we expected. We saw additional revenue based on more rapid than expected stocking and adoption of our entry sheets, essentially transferring some of our Q3 expected revenue into Q2.

We are especially pleased with these results given the significant headwinds we encountered, most notably hospital staff shortages in addition to the well-documented contrast supply shortages. The contrast issue impacted our procedure volumes in modest but real ways. This issue seems to be largely resolved and we expect limited impact on our business in Q3.

Hospital staff shortages conversely will remain a headwind for the foreseeable future. Such resource constrained operating environments are not new to us and we remain well suited to weather this storm. Our procedures target high acuity disease states, consume limited time and resource and produce excellent clinical outcomes for patients and economic outcomes for hospitals. As always, our team finds ways to execute our plan regardless of external headwinds.

With that, I'll now turn things over to Drew.

[Drew Hykes, COO]

Thanks Bill.

Before I review the growth drivers, I'd like to comment briefly on the CEO transition. First and foremost, I want to thank Bill for his contributions to Inari over these last eight years. When Bill started at the company, we are a scruffy 10 person venture-backed startup with no approved products.

Today, we are an established public company with over 1,000 clot warriors, multiple products in multiple large markets, increasingly broad-based capabilities and a shared ambition to change lives in the venous space and beyond. Under Bill's leadership, Inari's growth has been driven by a steadfast commitment to our patients, our people and to big ideas.

Bill has been a friend and mentor to me personally and I look forward to continuing to work closely with him both during this transition and beyond as he continues to serve on our Board. Lastly, let me just share how humbled I am to assume this role as we pursue our next phase of growth. I couldn't be more excited and confident about our future and the opportunity we have to impact the lives of countless more patients.

I'd now like to share with you the recent progress we've made on all of our growth drivers. Our first growth driver is the expansion of our sales organization. You will recall that we committed to at least 275 territories by the end of 2022. We entered July with over 270 territories, nearly reaching our annual goal in just the first six months of the year. We made this decision to accelerate the expansion of our sales organization for three reasons.

First, we were encouraged by the traction we saw at the start of the year. Second, smaller territories have had a highly favorable impact on our second growth driver producing deeper penetration in accounts. Third, this expanded sales organization will enable us to launch several new products later this year with nearly the full complement of sales professionals we have planned for 2022 and with a complete focus of our commercial management team.

Notably, we managed to hire more than 100 new sales professionals in the first half of the year while also delivering best-in-class revenue performance and navigating a set of especially challenging macro headwinds. We are pleased with our execution in the first half of the year and we're optimistic about the back half the year.

We're also making solid progress with our second growth driver, producing deeper adoption within existing hospital customers. Most VTE patients, despite our commercial success, never even see a physician with the skills and expertise to make the most informed clinical decisions. Our goal is to establish systems and processes that ensure patients are consistently identified and triaged to VTE expert. As I mentioned, smaller territories are especially useful for this effort.

Our third growth driver is to build upon our base of clinical evidence. We have a few updates and some exciting news here. First, the subgroup analysis of the FLASH data was presented at the Annual Meeting of the Society of Interventional Radiology. The study focused on the 60 patients who presented with severe pulmonary hypertension.

These patients are extremely sick and the potential for morbidity during any sort of treatment is high, yet even in this fragile patient population, the safety profile of FlowTriever was again exceptional. No major adverse events, no 30-day readmission and all can mortality was less than 2%. Both the excellent safety and efficacy results were statistically indistinguishable from the broader and less fragile population of FLASH patients. These results are unprecedented in the PE thrombectomy literature. Competitors have sometimes suggested FlowTriever procedures are deliveries. This is simply not true.

Next, the PEERLESS randomized controlled trial is enrolling nicely. PEERLESS, as a reminder, is a superiority trial comparing FlowTriever against catheter-directed thrombolytics for intermediate and high risk PE patients. Looking ahead to the fall conference season, we expect to report out both the complete 500 patient CLOUT DVT dataset and the 800 patients U.S. cohort of the FLASH PE dataset as late-breaking clinical trials.

Likewise, we expect to complete and report our FLAME survival study on massive PE later this year as well, which we believe will change guidelines. In summary, we continue to commit significant resources to the production and publication of clinical data.

Every new RCT, every new data cut from our large registries, every new investigator-initiated research protocol we establish and report advances our efforts to change the standard of care for VTE patients. And while not the goal, this also further differentiates us from competition.

Our fourth growth driver is to expand our product portfolio. We have several exciting developments to share here as well. First, we just entered full market release of our Gen-4 FlowTriever system. This device combines a number of features that make it more deliverable and easier to use.

During our limited market release, physicians used fewer FlowTriever devices, removed more clot and required fewer total passes per procedure while case times were reduced. Simpler faster procedures with better technical results translate to more procedures and better outcomes for our patients. The transition for our customers to this new technology is seamless and costless and it's already underway.

Some of our recent product launches are also progressing well. The entry sheet is now stock and being used routinely in several hundred of our accounts. Feedback has been excellent. Because it is included in our per procedure pricing, it also removes costs from the procedure, further improving economics for the hospital. ClotTriever BOLD is also now in full market release, is delivering excellent results in both acute and chronic DVT patients.

Finally, we recently obtained FDA clearances for two new products, the Arctic balloon-guiding sheet and [indiscernible] device, both devices are in limited market release. We are excited to share much more about these devices, the unmet needs they address and their corresponding target market soon. All of these new products are a direct result of the investment we have made to build a robust R&D engine that is delivering a steady cadence of new products designed to address unmet needs. You can expect more new products later this year.

Our last growth driver is expansion into international markets. We now have general managers fully installed in each of our three main international geographies. In Europe, we again saw sequential case growth despite the challenging operating environment. In the back half of the year, our European team will be focused on continuing to open new accounts while also driving increased penetration at existing accounts.

Beyond Europe, we saw a good case growth during the quarter in Latin America, Canada and Asia Pacific albeit off a still modest base. We are working towards additional market launches across these geographic regions during the back half of the year. As we've noted previously, international will not be a material component of our overall revenue mix in 2022.

Taken together, we believe we're making good progress across all our growth drivers. In many ways, this progress reflects the deliberate and intentional investments we have made and will continue to make. These investments are designed to enable us to treat more patients. We believe our strategy is working and that has served both our mission and our investors as well.

I'd like to close by restating that we believe we can and will grow consistently for many quarters to come. Our markets are large, the patient needs are significant and we are serious about our responsibility to do better for our patients. To-date, our journey has been guided by an unwavering commitment to our patients, our people and to big ideas. I couldn't be more committed to the same ideals nor more enthusiastic about this next phase of our growth.

With that, I'd like to turn things over to Mitch.

[Mitch Hill, CFO]

Thank you, Drew, and good afternoon, everyone.

Inari revenues for the second quarter of 2022 were $92.7 million, representing 7% sequential growth compared to $86.8 million for Q1 2022 and up $29.3 million or 46% from $63.5 million for the same period of the prior year. Compared to Q2 of 2021, our revenue growth is due to our continued efforts to open new customer accounts, focus on expanding our sales force and deepen our relationship with our existing customers.

We've also been successful introducing multiple new products to expand our FlowTriever and ClotTriever product lines. The revenue split between product lines were substantially the same year-over-year with 33% of our revenue derived from the sale of ClotTriever products during the second quarter of 2022 and 67% derived from the sale of FlowTriever, all consistent with 2021.

Gross margin was 88.8% for the second quarter of 2022 compared with 92.4% in the second quarter of 2021. The decline was primarily due to a decrease in our operating leverage as we completed our move to a much larger manufacturing facility in the fourth quarter of 2021 coupled with the addition of new products to our FlowTriever tool kit, which add additional cost of goods sold to our per procedure pricing approach.

Operating expenses were $91.7 million in the second quarter of 2022 compared with $54.5 million for the same period of the prior year. R&D expense was $18.6 million in the second quarter compared with $11.6 million in the same period of 2021. The $7 million increase in R&D expense was primarily driven by an increase in headcount as well as product development and clinical evidence development costs.

These initiatives are consistent with the company's previously discussed growth drivers. SG&A expense was $73.2 million in the second quarter of 2022 compared with $42.9 million for the same period of the prior year. The $30.3 million increase was primarily due to personnel related expenses as we increased headcount across the organization, and secondarily, due to higher marketing costs, travel expenses and facility related costs.

Net loss for the second quarter of 2022 was $10.2 million compared to net income of $4.1 million for the same period of the prior year. The basic and fully diluted net loss per share for the second quarter of 2022 was $0.19 based on the weighted average basic and fully diluted share count of 53.2 million.

These compared with a basic and fully diluted net income per share of $0.08 and $0.07 based on weighted average basic and fully diluted share count of 49.7 million and 55.6 million respectively for the same period of the prior year.

Before I move on to the balance sheet updates, I'd like to comment briefly on the company's Q2 operating loss. Inari's operating loss for Q2 was $9.3 million. During the past year, we've invested aggressively in all of our growth drivers, most notably our commercial growth drivers.

We've had considerable discretion and flexibility around these investments over the coming quarters. As we continue to grow during 2023, we expect our quarterly operating performance to return to intermittent profitability. As you know, we have been profitable in five of our nine quarters as a public company.

Moving to the balance sheet. Our cash and investments at the end of Q2 totaled $330.5 million consisting of $79.7 million of cash and $250.8 million of short-term investments. By way of reference, our cash and investments as of the end of Q1 of 2022 were $38.7 million. Our cash flows used in operating activities were $3.1 million for the second quarter of 2022 compared to cash flows generated by operating activities of $7.3 million in the second quarter of 2021.

Finally, I'll close my comments by addressing Inari's financial guidance. For the full year 2022, we are reaffirming our guidance of $360 million to $370 million in revenue.

With that, I'd like to turn the call back to the moderator for questions. For the Q&A segment, Bill, Drew and I will be joined by Dr. Tom Tu, Inari's Chief Medical Officer.

[Operator]

[Operator Instructions] Our first question comes from Cecilia Furlong with Morgan Stanley. Your line is open.

[Cecilia Furlong, Morgan Stanley]

Great. Good afternoon and thank you for taking the questions and Drew and Bill congrats on your upcoming new roles as well. But I wanted to start just and get a better sense if you can talk through what you saw in more detail from the contrast supply shortage in the quarter on the staffing dynamics that you called out both for 2Q as well as how you're thinking about it in the back half of this year, and really with your reiterated guidance, what that does assume from a staffing or capacity standpoint?

[Bill Hoffman, President and CEO]

Drew, do you want to get started on that. Thanks Cecilia.

[Drew Hykes, COO]

Sure. Thanks Cecilia. So, as you know, we guided flat for Q2 and we felt pretty good about how we executed during the quarter despite the macro headwinds that you identified, the contrast shortage was certainly present particularly early in the quarter and the staffing shortages were present in essentially all of our accounts to some level across the country and we see those staffing shortage manifest themselves and reduced interventional capacity, we see that manifest themselves in fewer staff bed and the inability to carry full census at the hospital level.

Despite those headwinds, we were able to execute well, the core business performed as we expected. We were able to execute some of these new product launches, most notably, the entry 24, that actually exceeded our expectations, it's a fantastic product with really good clinical feedback. It's also the first product we've had that's actually removed cost at the procedure level for the hospitals, and as a result, we actually outperformed on entry and actually pulled in some of the revenue that we would have anticipated in Q3 from that product into Q2.

So having said all of that, we still see those headwinds ahead of us, particularly the staffing shortages, those are not going away anytime soon and that certainly was part of our forward guidance. We feel that we're positioned pretty well relative to those staffing shortages, after all we've got two products that treat high acuity emergent procedures, we are able to do so with a modest resource footprint, no ICU stay, a really compelling economic value proposition.

So we feel like we can navigate those staffing shortages, but they are real and they're not going away. The reality is we're competing against not only ignorance and apathy but now in some cases STEMI and stroke and other highly emergent procedures for that limited interventional capacity.

So with all that as a backdrop, we felt that reaffirming guidance giving us high confidence in hitting that commitment was the right decision at this point.

[Cecilia Furlong, Morgan Stanley]

That makes a lot of sense. And if I could follow-up to just your comments on what you saw in the quarter with entry 24, and if you could comment just the attachment rate to-date. And then as we think about just the stocking component of the business, really what impact that had in 2Q and then as you think about 3Q, 4Q, especially in some of the pipeline products that you've called out, just how we should think about the impact to top line just from stocking? And thank you for taking the questions.

[Bill Hoffman, President and CEO]

Please go on.

[Drew Hykes, COO]

Sure. So maybe just to level set on what entry is for everybody. So again it's a sheet that we purpose-built for our FlowTriever procedures. It's the first product that the physician inserts into the patient becomes kind of the highway for the rest of the procedure. Up until entry, we've been relying on a third-party sheet from another manufacturer that was candidly difficult to use, suffered from spotty supply chain issues and it added incremental cost to the procedure.

Other than that, it was a great solution. So that's obviously - those reasons were obviously why we developed entry for our own use. We purpose-built that product specifically for FlowTriever, it's much easier to use, it's got a large bore aspiration capability that is important for our procedures.

And as a result, as I said, the uptake has been fantastic, the feedback has been excellent. We were able to stock that product into several hundred accounts during the quarter, which again exceeded our expectation because it's part of the PPP, it actually removes cost at the procedure level for the hospitals. And the feedback has been excellent, it's being used essentially in the places that's stocked, it's used essentially in a 100% of our FlowTriever procedures.

Maybe the last part of your question looking ahead to the back half of the year, we will have additional product launches. And as always, those new product launches will offer us some incremental revenue opportunity as we get those products placed onto hospital shelves.

[Operator]

Our next question comes from Larry Biegelsen with Wells Fargo. Your line is open.

[Larry Biegelsen, Wells Fargo]

Good afternoon. Thanks for taking the question. Bill and Drew congratulations. Bill, I know you're going to be around for a little while longer, but you'll certainly be missed.

[Bill Hoffman, President and CEO]

Thank you so much, Larry. I appreciate you saying that.

[Larry Biegelsen, Wells Fargo]

Yes definitely. So two from me, one just on the guidance. In the first half, you grew almost 50%, the guidance implies about 20% growth in the second half, the comps were easier. So I guess my question is, is there something you see in the environment that is resulted in this guidance or maintaining the guidance or is this conservatism which you guys typically do guide conservatively and how do we think about the Q3, Q4 cadence? And I have one follow-up.

[Drew Hykes, COO]

Yes, I can get started on that one Larry and maybe Mitch or Bill want to jump in as well. So I think what was important to us as we thought about guidance was the remaining headwind that we see out there relative to staffing shortages, and as you heard me talk about, we see that impacting essentially all of our accounts to some level.

Those headwinds are not going away anytime soon and we wanted to make sure that when we put guidance out there, we had a high level of confidence of hitting those numbers and matching those commitments.

We do see, as you look out further into the back half of the year, some important catalysts, right, we have this mega class of sales professionals that we've just brought on board that will be ramping their productivity as we move through Q3 and particularly into Q4, there'll be hitting the sweet spot of their productivity.

We've got important readouts coming in both CLOUT and FLASH. In fact, in FLASH, the PCP just announced the late-breaker for our 800-patient dataset for FLASH and we've got another one coming at another conference for CLOUT. We've got some new products coming in Q4 that we think will also offer some incremental revenue opportunities, and just another quarter of progress on our VTE excellence. I think all that gives us some confidence we're going to have a fair amount of momentum exiting the year, but we did have the staffing shortages in mind as we reaffirmed guidance for this point forward.

[Larry Biegelsen, Wells Fargo]

That's helpful, Drew. And second, you guys are hosting an Investor meeting next month, can you give us a little bit of a sneak preview of what we should expect? And then one question I've got from investors is, do you plan to give any long-term financial targets? Thank you.

[Bill Hoffman, President and CEO]

Yes, maybe I can dive in there Larry. So we spent a lot of time planning on this as you might imagine. And I think what we want to share is some of the near range, I know, most people are interested near range product offering so there'll be plenty of that and some demonstrations, touch and feel and so forth.

But I think one of the things that we're really excited to share is you have mentioned this or referenced our communication about transformation in the organization, I think it's underway and the capabilities have been installed throughout the organization, the depth of the bench, the depth of the talent on the team not just at the executive level but much deeper into the organization, I think we want to convey that as well.

There'll be plenty of discussion about the financial performance of the company. We're trying to - we're still in the process of determining long range, how much we want to convey in terms of the long range performance of the company. But I think what we've already shared here is that we will at least we released already confirm that we're going to return to operating close to profitability little above, little below by next year.

So I think we have plenty of discretion in terms of the way that we deploy resource and that served us extremely well. And I think you'll begin to see that as early as the fourth quarter with regard to this new class that the largest class that we've ever hired begins to hit their sweet spot in their productivity curve. So anyway, lots more to share here Larry within another six weeks or so before that Investor Day. So stay tuned.

[Operator]

Thank you. We have a question from Marie Thibault with BTIG.

[Marie Thibault, BTIG]

Hi. Just wanted to offer my congrats to Drew as well on the CEO role, that's very well deserved. And Bill we're going to miss talking to you every quarter, but I hope you get some time to work through that bucket list.

[Drew Hykes, COO]

Thank you so much. Yes, plenty of time.

[Marie Thibault, BTIG]

I wanted to touch here on the new sales reps, you mentioned over a 100 in the first half of this year. I think, Bill, you were just talking about the sweet spot on the productivity curve, remind us about how long it takes a new rep to really hit their stride here at Inari and what your expectations are then for the back half of the year, are you cooling off on hiring and happy to sit at that 275 or so territory goal that you started at the beginning of the year?

[Bill Hoffman, President and CEO]

Drew, you want to jump on that.

[Drew Hykes, COO]

Yes. Thanks Marie. So that was the largest class that we've ever brought on board. We did that very intentionally in anticipation of particularly some of these new product launches that we see coming in the back half of the year. We wanted to get territories down to as smaller size as possible and we wanted to put ourselves in a position where we could really focus in on executing those new launches on having some stability across the field team and really growing into the investment that we made in pulling in some of those hires.

So we like how we're positioned right now, just north of 270. I do think, as we look ahead to the back half of the year, we'll continue to make some more opportunistic and incremental adds to that team, but I think the real focus going into the back half of the year here is going to be less on bringing on board another big class and more on some of the things I described around execution and new product launch and really trying to settle into this much larger group that we just brought on board.

In terms of the productivity, we see folks come up to speed pretty quickly. Keep in mind, at this stage, almost all of our, essentially all of our new rep adds are stepping into some kind of established territory and some kind of a split, so they have existing accounts that they are inheriting and that also helps the reps come up the productivity curve relatively quickly.

We've never really tested the upper limits of that productivity because we tend to split before we're even able to see what the upper limits are. But certainly as we work through Q3, they'll continue to ramp, many of them are just hitting their territory within the last several weeks. So they really are just beginning to settle in their territories fully trained.

So we'll see that productivity improve during Q3, and as I said, I think as we enter Q4, they'll begin really performing like established territories. You'll certainly see the impact on the P&L, many of those folks were not on board certainly for the full quarter in Q2. So you will see the full burden of that large complement of reps, you'll certainly see that reflected in the P&L again in Q3 as a fully burden class.

[Bill Hoffman, President and CEO]

If I may just add one thing there, Marie. One of the things that we've seen and it will - I think it's obvious in the P&L is that our commercial system has been incredibly efficient, right, productivity of the sales [indiscernible] in the presence of a really strong gross margin and has put us in position much earlier in our commercial history and our history as a public company to hit that breakeven mark.

And I see us getting to exactly the same spot, our productivity is probably an all-time low just because sales professionals who come on board are at their lowest productivity the first month and we have a bunch of them now, literally in their first months.

But that efficiency has not changed, the productivity that we see with our sales professionals is strong early and it improves at least consistently through the first 12 months, and as Drew said, we don't give a chance, we don't give too many of these territories a chance to mature beyond 12 months before they're split. So we really - that's why we're quite optimistic as we get to the back end of the year and into next year, not only in terms of growth but also in terms of how the net income and net operating line.

[Marie Thibault, BTIG]

Yes, that's very helpful. Maybe I can segue to my next question from what Drew mentioned about the burden on the P&L. Mitch, you gave us a good hint at what 2023 could look like in terms of intermittent profitability, but when we think about the rest of 2022, how should we think about that OpEx line and the expense outlook here for the rest of the year?

[Mitch Hill, CFO]

Yes, thanks Marie. I guess I sort of addressed, I jumped ahead a little bit to talk about 2023 and that intermittent profitability comment I made. And just thinking a little bit back to 2022 and looking at Q3 and Q4, I think you've heard through our prepared remarks, we continue to see some difficulty in terms of the operating environment. We've talked about that and it's also reflected in the guidance which we've provided. So that's the topline outlook probably for Q3, getting better in Q4 as you heard from both Drew and Bill.

And then from an operating expense point of view, we'll have the full cost of that bigger class that we hired hitting the P&L in Q3, we're looking at more probably levels at consistent spend in some of the other OpEx categories for the business.

But the impact of that I think could take us, for instance, let's say, the $9.3 million operating loss that we just reported to something that could be in the low- to mid-teens, I call it, in Q3 and then hopefully improving in Q4 for the reasons we've discussed.

So that's sort of the perspective, I would say, for the remainder of 2022. 2023 I already commented on that. The real interesting thing and positive thing about Inari, just thinking longer-term and this may actually go back and touch on a little bit of the question that Larry asked was, the longer-term opportunity for profitability at the company. We have all the ingredients so they're really terrific business that will be a sustained producer of significant operating profits for the company.

You look at the market opportunity, you look at the productivity of the sales team, you look at the gross margin of the business, the opportunity to really drive leverage through the productivity of the sales team, as Bill just mentioned, and we think that's something that we are certainly looking forward too. We are not in a position today to really comment specifically on the timing of the level of that, but we are confident that we have every ability to become that kind of a business.

[Marie Thibault, BTIG]

All right, very good. I wonder if I could sneak one last one here at the risk of pushing my luck. I just want to circle back to Cecilia's question on stocking revenue. I want to try to determine how much of your outperformance came from procedure volumes versus some of the stocking uptick. Any chance you can give us a range, was it low teen percent of revenues, somewhere in that range?

[Mitch Hill, CFO]

Yes, we did disclose those figures in our past Marie as we did our earnings announcement for Q1 back in May. I think we tried to telegraph to everybody that we would no longer be sharing specific percentage figures for stocking revenue and procedure counts and things like that. As Bill and Drew both mentioned in their remarks, we were really pleased with the performance of the entry 24 sheets and the way that was accepted by our customers for all the reasons we've discussed.

And so there was definitely some revenue that probably moved forward in time, so from the Q3 timeframe to Q2. I'm reluctant to really say much more about it than that. We are, just kind of looking back at the core business, again we talked about the fact that we're very pleased with the performance of the core business in Q2. So I hope that helps you a little bit without really digging into any specific numbers.

[Operator]

We have a question from William Plovanic with Canaccord Genuity. Your line is open.

[William Plovanic, Canaccord Genuity]

Great, thanks. I look forward to giving you my congratulations when I see in person next month. So a question here, first on product, any feedback you can provide on the RTx balloon and when do you think - is that one of the products that is slated for full market launch [indiscernible] half of the year?

[Bill Hoffman, President and CEO]

Yes, why don't you jump in there Drew.

[Drew Hykes, COO]

Yes. So Bill, you know that we had the first component of that RTx system that we already received FDA clearance for. I don't know, it's probably 90 days ago now and what you're referencing is the second component of that same system the RTx balloon guiding sheet, which we just got clearance for within the last couple of weeks.

We've got now those first two components of the overall RTx system underway in our LMR, the first phase of our rollout where we really gather some initial feedback not only clinically but commercially as well and then we use that to inform the full market release. So we're still in the early days of that LMR work. But clearly as we move through that phase and look ahead to the back half of the year, we will be presumably hopefully moving forward with a full market release for the overall RTx system.

And as I think we get to that point, we'll be in a position to talk in more detail about what kind of unmet need and patient population that system is designed to address, it is a new patient population outside of our existing VTE TAM. But as part of our normal approach here, where we're probably stop short of talking about a whole lot of additional detail until we get the LMR behind us and feel like we're ready to shift into full market release with that product.

[William Plovanic, Canaccord Genuity]

Okay, great. Thanks. And then if I could switch over to the VTE, I don't think we really talked about that center of excellence program. Just how many centers are yet - just how is this progressing and do you expect having - how much impact do you expect to having a VTE coordinators going to help out in terms of, especially with the staffing issues and any [indiscernible] you guys can give along with the hospital, with the facilities?

[Drew Hykes, COO]

Yes. So Bill, we're making good progress quarter-after-quarter on developing that VTE excellence approach. And just to remind everybody, that entire program is part of our second growth driver and is really designed to address one of the key challenges of the VTE market and that's the fragmented care that has existed historically for these patients and the lack of systematic systems and processes that identify these patients, 100% of the time, risk stratify them and bring them forward to a group of caregivers that really understand the disease and can make a fully informed decision on how best to care for those patients.

So it's that fragmented care that lack of the systematic approach unlike you see in STEMI and unlike you see in stroke, that's the problem we're trying to solve with our VTE excellence program.

We're making progress quarter-after-quarter, we continue to refine and hone and iterate and improve that overall program but we are seeing success in moving accounts along the continuum from, what we call, engage into and power and finally, and as a result, the penetration at the account level into the TAM also goes up and increases as we help support accounts in developing those programs and moving along that continuum.

The placement of VTE coordinators and supporting accounts and helping accounts understand the business case, if you will, for investing in the VTE coordinator is an important part of that overall VTE excellence program, particularly in the later stages of work that we help accounts do in the later stages of that program development work.

We did add incrementally into that group of VTE coordinators and we're also, I think even more importantly, better understanding the profile of the optimal VTE coordinator, what scope of work gives the biggest impact, where they can really help move the needle most efficiently at the account level. So all of that continues to move forward, we like what we're seeing, but by the same measure, I think we've got lots more work still to do across the account base.

[Bill Hoffman, President and CEO]

Bill I might add one little bit of color about the VTE coordinator role. Clearly, staffing shortages remain tremendous headwind in terms of the operating environment. One unintended consequence is that VTE coordinators are actually used as a potential retention tool for nurses who might find remaining in clinical work challenging, but we can preserve their experience and add them to the patient care pathway through that mechanism.

[William Plovanic, Canaccord Genuity]

Thanks. And then lastly, if I could just ask, just in terms of ASPs. Any color regarding year-over-year total ASPs? And then can you just help us to understand, the real question is unit growth tracking to year-over-year percentage revenue growth, is there ASP up down, help us out with that? Thanks.

[Mitch Hill, CFO]

Bill, we've been pretty consistent in terms of our ASPs for the FlowTriever, for the ClotTriever. I think we've discussed in the past, the approach to the company or pricing strategy of the company has really been to price based on value. And as we've added additional products into the, let's say, the FlowTriever toolkit and for some customers the ClotTriever has become a toolkit as well.

It's actually a really nice position to be in, in terms of going to those hospitals whether they're independent hospitals or whether they're large part of larger hospital systems to say let's look at the value we're providing to the interventional physicians and the tools that they can pick from to get the best possible outcomes for the patients. And that's helped us a lot in terms of maintaining the pricing that you've heard from us in the past.

So there hasn't been any really meaningful changes there in the pricing side, that's been something we've obviously been pleased to see as we're building the business certainly with the macroeconomic stuff going on in the U.S., we were wanting to make sure that we wouldn't face any pricing pressure for the business and we're comfortable with where we are.

[Drew Hykes, COO]

Yes, I want add one more thing, Bill. So pricing has been rock solid, if anything just minor little ticks upward as contracts expire and so forth. The economic proposition for the FlowTriever and ClotTriever procedures for hospitals is still really, really good. So that's one of the reasons I think that we've been able to perform through challenging operating environment.

The other thing I want to say though, we guided flattish for Q2 and we recognize that several things were going on in Q2, not just the headwinds but also the tremendous amount of work and effort that is required to hire as many people as we hired in Q2, so it's a major lift. And we are really happy with the way we performed on, as we said on the core business. I think what we didn't quite anticipate was the pace in the uptick in adoption of the entry sheet.

But overall, for the year, I think we're feeling quite confident as we always have been about the impact this large group will have and our ability to execute through the challenging headwinds, which is why we kept the guidance where we had it, that does imply pretty significant Q4.

[Operator]

[Operator Instructions] We have a question from Adam Maeder with Piper. Your line is open.

[Adam Maeder, Piper]

Hi, good afternoon. Thanks for taking the questions and I'll echo my congrats Bill and Drew on the transition. Maybe just to start, wanted to ask one on the operating environment. Just looking for a little bit more color or detail in terms of what you're seeing there, given some of the headwinds you called out, are you able to share volumes and how those trended over a month-over-month basis in Q2 and then what have you guys seen play out thus far throughout July? And then I had a follow-up. Thanks.

[Drew Hykes, COO]

Yes, I think. Thanks Adam. I think maybe to talk about the two primary headwinds that we saw during the quarter, the contrast shortage and staffing shortages. Contrast shortages, I think clearly were present for most of the quarter, but I think as we exited Q2, we began to see those contrast shortages begin to lift in many accounts, I'm sure that's consistent what you've heard from other manufacturers as well. So I think hopefully the worst of that one is behind us, and I think that's consistent with what you've seen and heard even from GE.

On the staffing shortages, that has been very consistent throughout the quarter. We see that pretty steady over time and we see it also very consistently geographically, we see it in large hospitals and small hospitals, academic centers, everything in between. It looks a little different at the account level, sometimes it's more significant for the cath lab staff and the ability to do interventional procedures.

I think in other accounts, we see it more prevalent in our ability just to staff the number of beds that they have and carry a full census and have the inpatient volumes that you'd expect. So there is some variability in terms of what the impact looks like at the account level. But again, over time, very consistent as well as a lot of consistency having some impact across nearly our entire comp base.

[Adam Maeder, Piper]

Okay, that's helpful. Thank you. And then maybe for the follow-up, I'll ask about some of the datasets that are coming down the pike later this year. I think I heard more data from CLOUT, FLAME and FLASH and one of those sounds like it's slated for a late-breaker at TCT. When should we expect the other datasets and how impactful do you think these updates can be from a commercial standpoint? Thanks again for taking the questions.

[Tom Tu, CMO]

Thanks for your question Adam, it's Tom here. So you are exactly correct in the three major registries that we anticipate data releases for by the end of this year. The first being the FLASH 800 that is the complete U.S. cohort of patients treated in the FLASH registry that has been accepted as the late-breaker at the TCT meeting. I can't imagine a better platform, arguably most important U.S. interventional cardiology conference now taking on pulmonary embolism as an area of interest. So we're very excited about that.

The CLOUT registry has the final 500 patient, complete cohort being reported out. We anticipate that will be short time later this year at an upcoming conference. And then I think the perhaps unsung hero of the bunch, the FLAME registry, this is the largest contemporary registry of high-risk PE patients, the ones with the highest rate of mortality. We anticipate an interim analysis coming any minute now and hopefully that datasets can be presented later on this year as well.

As far as the impact to the commercial uptick of these procedures, frankly at this stage of the game, quantity is quality. We are presenting multiple times at major meetings every year, I think that's moving the needle in terms of interest and excitement about treatment of these disease states with our products, hopefully, approaching the sentiment that has had for heart attack and stroke. But I will remind everybody that what we've said before, we don't anticipate any inflection points anytime soon adoption is going to be really loose on the ground, trench warfare, convincing hearts and minds one at a time.

[Bill Hoffman, President and CEO]

If I may just underscore one thing, I want to make sure this is highlighted. We, the fact that TCT is - the PE and our FLASH registry is going to be front and center on the new page and arguably the most important interventional conference in the world, is a big deal, not just for Inari, it's our stuff so that's really cool.

But for PE, generally, I think that's a signal there that suggests this is becoming mainstream, that was unimaginable even 12 months ago, unimaginable in of course 800 patients. 800 patient studied with the FlowTriever device in high volume centers with excellent reputation, that is no joke. That's a pretty big deal. And still we believe no major inflection point, this is a grind it out execution play and we've been pretty good at that.

[Adam Maeder, Piper]

Thanks for the color.

[Bill Hoffman, President and CEO]

Yes.

[Operator]

Thank you.

[Mitch Hill, CFO]

Sorry, I might actually jump in there. We're having some technical problems with [indiscernible] that Travis had a question for the team here. I'll go ahead and ask that since he's not able to connect or having some challenges with the phone that he just wanted to know why Bill thought this is the right time to step aside in light of some of the new product announcements and some of the other exciting things happening at the company?

[Bill Hoffman, President and CEO]

I wish Travis was here. I'd say hello to him too. Yes, we've had - I think you've heard we've had some technical challenges here at the new system, and so thanks for bearing with us. Somebody's children were very, very stat to see go, and I was happy to hear that. So thanks Travis.

Look, there is a few things going on here. why am I leaving, it's purely personal, I've been CEO now here for almost eight years, and before that, 7.5 years with a previous company that was acquired. And so it's a long time and it's been a grime, maybe some people find a way to do that without the intensity that is all-consuming but I haven't found that path. I'd loved every second of my time here on this mission and with this team, I really love it. But I've had no time to love much of anything else. So hoping to spend a bit more time with books and bikes and my family and my kids and it's just an exciting time in that way.

Why now? I think it's even in your question is wrapped up, the answer is wrapped up in the question, the company has never been in better shape. The pipeline is full of new products. We have a 1,000 plus clot warriors, sales team now is more than 300 people all in with managers and so forth.

All the growth drivers are in great shape. Tom just describe the tsunami of data that's coming down the pike here supporting the safety and efficacy of our devices, will be in new markets shortly. And this product pipeline, which we've emphasized all year is being spectacular for 2022, doesn't end right, there is an equally robust arguably even more exciting pipeline beyond, largely due to the systems and processes that Drew has begun to install.

And then I will say just one last thing, all of you have seen and heard Drew since the beginning. I can make a pretty compelling argument that Drew was and is now much better public facing CEO than I ever could have been and his mindset is training his problem solving skills, he's the best executive I've ever seen.

And I think his skill set is going to - it's already been on display, the reason that we promoted him to COO couple of years ago was because he was just really good at the problem solving, a lot of the systems and the processes and the programs that are necessary for the explosive growth across function communication, the complex problems that have allowed us to explode with new products and new team members, a lot of that was installed and executed by Drew. And there's not a shred of, not even a sliver of difference between the two of us or anybody here on this call or the rest of our team in terms of the commitment to the mission. So it seems like a pretty good time.

Let me just say one last thing, when we raised money maybe three, four months ago, everyone was asking, we have a strong balance sheet, you're operating pretty consistently near breakeven, you don't really need the money, why are you raising money, and I said, at that point, if I were you the question that I think you really want to ask but you were all too nice to ask it is are you about to do something really stupid with this money and of course we didn't have a merger of equals or spend of $1 billion or $0.5 billion on the new company, something like that.

And I think the same question is true now or is there something else and hopefully it's pretty apparent that the company is in fantastic shape and we have the enviable envies to have probably a better CEO in waiting than we had exiting and that is an exciting time for the company. So, I'm really excited from my own greedy personal reasons to have opportunity to do what I'd like to do and I think equally excited about Drew's role, the impact that he's already had and seen him front and center is watching from a front-row seat is going to be a real pleasure from the board.

Sorry, you asked, don't you Travis. Is this it, that's it. Operator we got nothing else on this end, how about you.

[Operator]

There are no other questions in the queue.

[Bill Hoffman, President and CEO]

All right. Thanks everyone.

[Drew Hykes, COO]

Thank you so much.

[Operator]

This concludes today's conference. Thank you for participating. You may now disconnect.