Inari Medical Q4 2022 Earnings Call Transcript

Quartr
Provided by Quartr
February 27, 2023

Key Takeaways

  • Positive Sentiment: Revenue in Q4 was $107.8 million, up 30% year-over-year and 12% sequentially, at the high end of pre-announced guidance.
  • Negative Sentiment: Net loss of $5.8 million in Q4 and a $28.1 million operating loss for full-year 2022 reflected aggressive investment in growth initiatives.
  • Positive Sentiment: Reaffirmed full-year 2023 revenue guidance of $475 million–$485 million, underscoring confidence in market expansion and competitive positioning.
  • Positive Sentiment: International revenue reached $9.4 million in Q4, growing 144% year-over-year and 27% sequentially, driven by European adoption and new country launches.
  • Positive Sentiment: Advanced clinical evidence with large registries (CLOUT, FLASH), the upcoming FLAME trial presentation at ACC, and key RCT enrollments in Defiance and Peerless to support standard-of-care adoption.
AI Generated. May Contain Errors.
Earnings Conference Call
Inari Medical Q4 2022
00:00 / 00:00

There are 14 speakers on the call.

Operator

Afternoon, and welcome to the Inari Medical Fourth Quarter 2022 Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Caroline Korner, Investor Relations.

Operator

Please go ahead.

Speaker 1

Thank you, operator. Welcome to Inari's 4th Quarter 2022 Earnings Call. Joining me on today's call are Drew Hikes, President and Chief Executive 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 Trends and demand for NARE's products, NARE's expected financial performance, expenses and position in the market and the impact of COVID-nineteen on NARE's operations and NARE's customers' 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, particularly the risk factors described in the NARE's annual report on Form 10 ks for the year ended December 31, 2022,

Speaker 2

Inari undertakes no obligation to

Speaker 1

update these statements except as required by applicable law. Inari's press release of Q4 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 P. M.

Speaker 1

Pacific Time today. Now, I would like to turn the call over to Drew for his comments and Q4 2022 Business Highlights.

Speaker 3

Thank you, Caroline, and thank you everyone for joining us today. Our Q4 was successful and highly productive. Revenue growth was strong and we executed crisply across all our growth drivers. We presented important new data from the 2 largest prospective I will share additional detail about all of this shortly, but we'd like to start now As we always do with a patient story which highlights the clinical impact and continued competitive advantage of our purpose built technology. Last month, a 50 year old man in Texas with complex DVT involving both legs and a clotted IBC filter presented to the hospital.

Speaker 3

A consulting interventionalist decided to trial a new 16 French device to gain an understanding of how it performed. Despite the device's purported ability to minimize blood loss, over a 1,000 milliliters of blood was removed, which is 20% of the patient's total blood volume. After over 2 hours of work, the physician abandoned the device trial due to inability to remove residual thrombus combined with safety concerns related to the significant blood loss. The physician then opted for treatment with the clot retriever system and in 30 minutes The patient was completely thrombus free. That portion of the procedure only resulted in 10 milliliters of additional blood loss.

Speaker 3

We believe this case highlights the fundamental shortcomings of competitive platforms, which failed to remove all the clot, while resulting in significant blood loss. Blood loss adds time and complexity for the physician operator, is economically disadvantageous for the hospital And most importantly, it's dangerous for the patient. VT patients who require just 1 unit of transfusion, Roughly 200 milliliters are associated with a 3 fold increase in mortality, double the hospital costs and 66% increase in 30 day readmission. In contrast, our ClotTreever and FlowTreever systems have been purpose built to Safely and effectively remove all the clot in both DVT and PE and to do so with minimal blood loss. In fact, the blood loss from clotriever reported in our clot registry was just 40 milliliters and the blood loss from FlowTriever reported in our FLASH registry After the introduction of FlowSaver was just 100 milliliters.

Speaker 3

Now I'd like to provide a brief summary of our Q4 financial performance. Our revenue in Q4 was $107,800,000 at the high end of our pre announced revenue range of $107,000,000 to $108,000,000 and up 30% year over year and 12% sequentially from Q3. The performance was driven by robust underlying procedure growth across both the clothever and flow retriever product lines. We are pleased with how our business performed in Q4 and enthusiastic about how we're positioned heading into 2023 and beyond. Our end markets are large and remain highly underpenetrated.

Speaker 3

And while we continue to view competition in VTE as potentially additive to our efforts to develop the market, make no mistake, As the clear market leader, we are highly confident in our ability to maintain our competitive position relative to devices with inferior safety or efficacy profiles. Our patients deserve the best possible outcomes and we remain steadfast in our mission. With that, I'll now turn to our growth drivers. Our first growth driver is the expansion of our sales organization. We ended the year with just over 280 U.

Speaker 3

S. Sales territories. Following the hiring of our largest sales class to date back in Q2, We intentionally moderated our hiring in Q3 and Q4. We're pleased with the resulting operating leverage and productivity gains we're beginning to recognize with our sales force. Consistent with that approach, in 2023, we expect to continue adding sales professionals each quarter, albeit at a more measured pace and anticipate ending the year with at least 310 territories.

Speaker 3

Continued expansion of our sales organization results in smaller and smaller territories. This in turn positions us well to execute on our 2nd growth driver, which is increasing penetration in existing accounts. Despite our commercial success, the vast majority of BT patients continue to be treated with anticoagulation alone and never even see a physician with a VT expert. Our goal is to establish systems and processes Similar to stroke and MI that ensure patients are consistently identified, screened and evaluated by a VT expert. Our VTE Excellence program is a highly differentiated, comprehensive and repeatable approach to partner with hospitals to do just that.

Speaker 3

We're leveraging the capabilities we have created and are continuing to see solid progress moving our customers through to the most advanced phases of VTXcellence where TAM penetration is several times higher than in the earlier phases. Although, VT excellence is proven to be very effective at developing the VT market, We believe it also clearly differentiates us from competition. Our 3rd growth driver is to build upon our base of clinical evidence. The past several months have been among our most productive ever. We presented key updates from our cloud and flash registries in September October.

Speaker 3

These studies once again highlighted that clot retriever and flow retriever are safe, remove more clot than any other devices ever studied and achieve best in class patient outcomes. Importantly, the data also show our devices are highly effective with only a small amount of blood loss. This gives our physician customers the confidence to treat VT patients completely and remove all the clot without compromising patient safety. Looking ahead, the FLAME study has been accepted as a late breaking clinical trial at the American College of Cardiology Conference in early March. FLAME is the largest ever prospective study in high risk PE.

Speaker 3

These are the sickest 10% of PE patients who are in active hemodynamic collapse. We believe FLAME will change the standard of care in high risk PE. Importantly, the results could also broaden adoption of flow through therapy within intermediate risk PE patients. Keep in mind, the intermediate risk PE patient population is 5 times larger than the high risk PE patient population. Turning to our RCTs, we're pleased to recently announce the first enrollment in our Defiance RCT comparing clot retriever to anticoagulation alone.

Speaker 3

The study is designed to establish clot retrieval as the standard of care for DVT treatment. We're also seeing robust enrollment in our Peerless RCT comparing FlowTriever to catheter directed lytic therapy for the treatment of PE patients. If successful, Peerless will usher in the end of lytic based interventions in intermediate risk PE. The significant investment we have made in our clinical competencies is And we believe our commitment to generating high quality data will help change the standard of care in VTE. Although this commitment is based upon a sense of responsibility to physicians and patients, it also serves to further differentiate and distant scenario from both current and future competition.

Speaker 3

Our 4th growth driver is to expand our product portfolio. We have several updates to share here as well. First, ProTrieve has been in full market release for the past several months. ProTru is a device that provides protection to the heart and lungs during complex DVT procedures involving extensive clot. We're pleased with how the launch is progressing and encouraged by the enthusiastic feedback from physicians.

Speaker 3

We estimate ProTrieve can be used in approximately 15% of our existing DVT procedures. We believe a large percentage of Competitive DBT interventions could also benefit from ProTrieve. The device is generally sold outside of our per procedure pricing at an ASP progressing well in the early stages of full market release. Enthral is a thrombectomy system designed for small vessels, including AV fistula and veins in the upper extremities and below the knee. We estimate the combined total addressable market is 250,000 to 300,000 per year in the U.

Speaker 3

S. Alone. An ASP of $4,000 Tensro represents an additional $1,000,000,000 market. We're also making progress on the development of our purpose built chronic venous disease toolkit with an annual incidence of roughly 100,000 patients and a prevalence of over 1,000,000 chronic venous disease represents the largest incremental unmet need that we are addressing. We know that unlocking this opportunity will require us to leverage the same types of market development capabilities we have established while working in VTE.

Speaker 3

Next, I want to provide an update on ARDYX, our system that combines both aspiration and mechanical thrombectomy to treat peripheral arterial thrombosis. Although this is a mature market, there is still a high reliance on thrombolytics and open surgery. We recently completed the Ardix Limited market release or LMR. We observed some excellent case outcomes and the system exhibited a pristine safety profile. Despite this, we have decided to implement some improvements to the system based upon physician feedback we gathered during the LMR.

Speaker 3

We expect the Arteryx toolkit to reenter LMR in 2024 once this work is completed. We remain committed to addressing important unmet needs in this patient population and will release Ardex broadly when it meets Q4 marked another quarter of record case and revenue for our international business. Based upon continued growth and relevance, We're pleased to provide a revenue breakout for the first time. Growth in the quarter was 144% over Q4 of 2021 and up 27% sequentially. For the full year 2022, our international business generated revenue of $9,400,000 compared to $2,600,000 in 2021.

Speaker 3

Our performance was primarily driven by continued adoption in Europe. On the product front, we were pleased with the recent MDR approval of FlowSaver. Beyond Europe, we also saw strong case growth during the quarter Our existing markets in Latin America, Canada and Asia Pacific. We recently completed our first cases in Australia, New Zealand and Argentina, And we anticipate additional launches later this year. In China and Japan, we are continuing to pursue regulatory approval, while also

Speaker 4

exploring our go to market strategies.

Speaker 3

I'd like to close by commenting on my first 60 days as CEO. We completed 2022 with a record Q4 driven by strength across our core business. That momentum carried through into 2023 We're off to a strong start with January February among the best months we have ever had. In short, I could not be more excited about the health of our business and the bright future of our company. Our markets are large, the unmet needs are significant I have no doubt we can and will grow consistently for many quarters to come.

Speaker 3

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

Speaker 5

Thank you, Drew, and good afternoon, everyone. Enari's revenues for the Q4 of 2022 were $107,800,000 up $24,600,000 or 30 percent from $83,200,000 for the same period of the prior year and up 12% or 11,600,000 sequentially over the Q3 of 2022. Compared to Q4 of 2021, our revenue growth was due to our continued efforts to open new both the Flowtreever and Cloudtreever product lines and also began commercializing the ProTrieve and Inthrill products. The revenue split between product lines was similar year over year with 32% of our revenue derived from the sale of CloudTraver and other systems compared to 70% in 2021. Gross margin was 87.8% for the Q4 of 2022 compared with 90.1% in the Q4 of 2021.

Speaker 5

The decline was primarily due to the addition of new products to our FlowTrivers system toolkit. This adds additional cost of goods sold due to our per procedure pricing model. Operating expenses were $100,500,000 Q4 of 2022 compared with $73,200,000 in the same period of the prior year. R and D expense was $20,400,000 in the 4th quarter compared with $18,700,000 for the same period of 2021. The $1,700,000 net increase in R and D expense was SG and A expense was $80,100,000 in the Q4 of 2022 compared with $54,500,000 for the same period of the prior year.

Speaker 5

The $25,600,000 increase was primarily due to personnel related expenses as we increased our headcount and secondarily due to higher travel expenses. Net loss for the Q4 of 2022 was $5,800,000 Compared to net income of $1,100,000 for the same period of the prior year, the basic and fully diluted net loss per share for the Q4 of 2022 was 0.11 dollars based on the weighted average basic and fully diluted share count of 53,600,000. These compare with a basic and fully diluted Net income per share of $0.02 based on a weighted average basic and fully diluted share count of $50,000,000 $55,600,000 respectively for the same period of the prior year. Shifting to full year 2022 financial results. Inari's revenues for the full year were $383,500,000 up $106,500,000 or 38 percent from $277,000,000 for the full year 2021.

Speaker 5

36% of this annual growth was driven by our U. S. Business, While 2% of the growth was generated internationally, primarily in Europe, compared to 2021, our revenue growth was due to our continued efforts to new customer accounts, expand our sales force, introduce new products and deepen our relationship with existing customers. The revenue split between product lines was substantially the same year over year with 32% of our revenue derived from the sale of PlotTriber and other systems and 68% derived from the sale of FlowTriber Systems. Gross margin was 88.4% for the full year 2022 compared with 91.1 percent for the full year 2021.

Speaker 5

The decline was primarily due to the addition of new products to our FlowTriever per Procedure model as well as a decrease in operating leverage due to the expanded footprint of our manufacturing operations. Operating expenses were $367,100,000 for the full year 2022 compared with 2 $141,400,000 for the full year 2021. R and D expense was $74,200,000 for the full year 2022 compared with $51,000,000 for the full year 2021. The $23,200,000 increase in R and 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 our previously discussed growth drivers.

Speaker 5

SG and A expense was $292,800,000 for the full year 2022 compared with $190,400,000 for the full year 2021. The $102,400,000 increase was primarily due to personnel related expenses as we increased headcount across the organization and secondarily due to higher travel expenses, marketing costs and professional service costs. Net loss for the full year 2022 2022 year was $0.55 based on the weighted average basic and fully diluted share count of 52,800,000 shares. These compare with a basic income per share of $0.20 and fully diluted net income per share of $0.18 based on a weighted average basic share count of 49,800,000 shares and fully diluted share count of 55,600,000 shares

Speaker 3

for the year 2021.

Speaker 5

Before I move on to the balance sheet updates, I'd like to comment briefly on the company's Full year 2022 operating loss of $28,100,000 Consistent with our messaging during 2022, we invested aggressively in our growth drivers. We've leveraged these investments to deliver robust growth, build important capabilities and ultimately better serve our patients. Earlier in the call, JU shared the exciting progress we are making growing Enari's international business. Building this foundation has taken and will continue to take significant investment. In fact, the international business accounted for roughly half of our operating loss in 2022.

Speaker 5

As we look ahead to 2023, we are working to reduce the rate of operating expense growth, while leveraging our previous investments. We expect to show sequential progress related to these efforts as we move through the year. Looking even further ahead to 2024, At the end of Q4 totaled $326,400,000 consisting of $60,200,000 of cash and $266,200,000 of short term investments. By way of reference, our cash and investments as of the end of Q3 of 2022 We're $319,200,000 Our cash flows used in operating activities were $14,000,000 for the full year 2022 compared to cash flows provided by operating activities of $25,500,000 in the full year 2021. Lastly, I'd like to address Enari's financial guidance.

Speaker 5

For the full year 2023, I'd like to reaffirm our revenue guidance of Drew and I will be joined by Doctor. Tom Tu, Enari's Chief Medical Officer.

Operator

We will now begin the question and answer session. Our first question is from Travis Steed with Bank of America. Please go ahead.

Speaker 6

Hey, everybody. Thanks for taking the questions. I guess to start with maybe some comments on Q1. I heard you say January, February the best month you've ever had. Curious if you could kind of break out some of the competitive trialing impact that you saw, if you're comfortable with consensus of $104,000,000 And then on the 2023 guidance, just curious if you could help break out how you're thinking about the new product contribution versus share and market growth within the 2023 guidance?

Speaker 4

Sure. Thanks for the question, Travis. I can handle the some of the competitive dynamics and what we've seen here most recently and then I think Mitch can Probably take the guidance part of your question. Maybe I'll start just by reminding everybody that this is a $6,000,000,000 market that we are operating in. And we believe it's 6%, maybe 7% penetrated with our technologies.

Speaker 4

Our focus, as you know, historically has largely been on market growth, on market expansion, on making the investments we need to make To really begin changing the standard of care for these patients, a point of market growth It's worth 10x the point of market share at this rate of penetration. So our focus Historically and as we move forward is largely on market expansion. To the extent we're having new high quality rivals Enter the market, they can help with that market development effort. And I think that has the potential to be quite valuable and impactful for patients. Having said all that, where we compete head to head, we continue to feel very confident in our ability to protect and even extend our existing leadership position.

Speaker 4

We've got a significant head start. We've got hands down the best field team In the market, we've got a highly differentiated approach to market development. We've got a mountain of clinical data That is growing larger by the day. We've got innovative purpose built technology and a robust innovation pipeline. I think all of that gives us a lot of confidence.

Speaker 4

We're going to be able to continue to protect and extend our leadership position. Specific to Lightning Flash, we're 6 weeks into that product launch. We have seen competitive trialing. We are quite familiar with what a 16 French platform offers clinically. We've had that product in our own portfolio for a couple of years now.

Speaker 4

And the feedback we're hearing from our team and from physicians is very consistent. 16 French platform, we believe is underpowered in PE and is going to leave clock behind and that's exactly what we're hearing consistently. On the DVT side, we believe an aspiration only approach is going to leave clot behind for the vast majority of these patients that have chronic Wallet here at Klot. And again, that's exactly what we anticipated and exactly the feedback we're hearing consistently. At the same time, as they move from a 12 French to a 16 French platform, they're going to increase Financially, the amount of aspirational flow and the amount of blood loss that goes along with that.

Speaker 4

And despite attempted mitigations, we are hearing consistently of significant blood loss. And Tom can talk more about the clinical implications that led blood loss along the way here, but that's what we're hearing. And as a result, we have not had a single ANARI account that has trialed CAT 16 and converted to Penumbra. So we believe bottom line that the CAT 16 So maybe I'll pause there and hand things over to Mitch to address the guidance part of your questions.

Speaker 5

Yes. Travis, on the Drew Sorry, on the guidance question, when we put together our 2023 guidance, we really tried to contemplate all of these factors that are going into the business this year, such as The ability to grow our 2 sort of core VTE markets, the new TAMs that we are sort of focused on for the year, Specifically, that's made available with ProTrieve and Enthrill. We also thought about the U. S. And OUS business and the competitive as you just heard about from Drew.

Speaker 5

Finally, we considered all the pricing dynamics that are going on in the marketplace and we tried to reflect all of those in the numbers the sort of continued confidence in the growth of our business, the U. S. Market and internationally as well. The new TAMs specifically to your question, I think the contribution there is going to be relatively modest. It's kind of early in both of those stories.

Speaker 5

They're still launching. They're doing well. But we're working through the back approval process with our hospital customers across the U. S. And it's going to be sort of a slow build for those.

Speaker 6

All right. That's helpful. And a quick follow-up is, and it sounds like, I guess, 6 weeks into the full launch, there's always this worry that maybe you just haven't seen the full impact of the launch yet. Curious if you're seeing it in all of your accounts, have you seen troweling kind of widespread or that's still more to come? And then curious what kind of feedback you got on and the limited market release and I'll drop.

Speaker 4

Great. Thanks, Travis. Yes, so we are 6 weeks in. We've seen a pretty steady cadence of competitive trialing. This is not a new phenomenon.

Speaker 4

This is exactly the pattern that we with the CAT 12 launch for instance. Some of the back approvals undoubtedly are going to take longer and some go faster. We see that in our own New product launches. So I would imagine they're likely in the middle innings, if you will, of the rollout. I think they've shared publicly.

Speaker 4

They've entered full market release in early January and didn't have any supply constraints, and they We have talked about navigating their way through back approvals exactly as you'd expect. So I think we're in the middle innings and I think we've got a pretty good Sense of how the product is performing as you heard me describe. Tom, maybe you'd want to talk about Arteryx?

Speaker 7

Sure, Travis. So just as a reminder, arterial thrombosis is the smallest of our new TAMs, but Still a space that has significant unmet needs. It's different than our other markets and that it's mature. It's got established therapies And a high bar for entry, we completed the ARDEX LMR recently and we're very satisfied with Some of the case results and the safety record was pristine, but it didn't quite meet our very high standards for commercialization. What we want to do is work to improve the ease of use and effectiveness of the device and expect to complete We're committed to doing this right just like we did with our core products and this is still a compelling unmet need.

Speaker 7

We're going to Confidently bring a solution that our patients deserve.

Speaker 8

Great. Thanks a lot guys.

Speaker 5

Thank you.

Operator

The next question is from Cecilia Furlong with Morgan Stanley. Please go ahead.

Speaker 9

Great. Good afternoon and thank you for taking the question. I wanted to start with Protrieve. If you could comment really where you are at this point in the full market release, but then also what you're seeing to date in terms of use with competitive products? And then just second product related question, if you could comment to just across your chronic venous disease toolkit, new products currently planned to launch this year?

Speaker 4

Sure. Thanks for those Cecilia. So relative to Protrieve, we are, I don't know, 4 months into the full market release. So we're clearly still working to gain a VAC approval for that product. We've got that product stocked at this point in less than 50% of our account base, but we're getting very good feedback and enthusiastic feedback from physicians.

Speaker 4

It does a very effective job at addressing a pretty significant unmet need for complex DVT procedures where they're at risk of embolizing clot and causing APE. So we like what we're seeing so far. The fact that we've priced it outside of the per procedure price model gives us some nice incremental revenue opportunity on top of the clinical impact that it's having. But again, we're still in the relative Early phases of navigating our way through back approvals and getting the product fully stocked across our entire account base. Relative to CBD, you know that we're already helping some of those patients with clotroofibold, Although BOLD wasn't necessarily designed specifically for that group of patients, it has indeed And then we've got a series of additional tools that we'll be adding to the CBD toolkit As we move through the rest of this year and looking out further beyond that, we've talked in a fair amount of detail about Revcore, which is going to be the first of those new incremental tools.

Speaker 4

That was one of the products that we shared at the Investor Day, For instance, back in September, that product will be coming out here, the first half of this year and will be kind of the second addition to that CBD toolkit alongside Bold. And then as you look out further into the end of this year and into next year, we'll have additional Tools that we will be adding to that toolkit just like you've seen us execute with FlowTriber and ClockTriber.

Speaker 9

Great. And if I could follow-up also just on gross margins, how we should think about 'twenty three versus the long term outlook for From mid-80s factoring in, how you're thinking about OUS expansion, new product launches and also just the per procedure pricing impact on margins?

Speaker 5

Yes. Thank you, Cecilia. I'll try to get started with that one. So the number you saw for Q4 of last year is something that we believe Something we planned for essentially as a result of the additions to the Flowtreever toolkit and as well as some of the operating leverage issues we've dealt with in our manufacturing facility. The longer term view towards gross margins is still kind of in that low to mid-80s Sort of the zip code, I would call it.

Speaker 5

And I think it will be a very gradual sort of migration towards that point. The factors that will contribute to that are the ones that you've mentioned there. Some of the products that we'll introduce in the future have a lower gross margin profile than the 2 products that primarily drive that today, the Cloud Treiber and the Flow Treiber. The international side of the business is something that has a sort of it detracts from the current gross margin profile of the business, but we're to serve patients throughout the world, so that's something we really want to do. We do continue to evaluate opportunities to sort of Work against that.

Speaker 5

We're consistently looking for opportunities to basically sell based on the kind of the value bundle, if you of our products and so we look for opportunities to take price and we also look for opportunities to Change our gross margin through some of our manufacturing, purchasing and other things that we can do Sort of reduce the cost to get sold of the product as we go along.

Speaker 9

Great. Thanks for taking the questions.

Speaker 3

Thank you. Thanks, Cecilia.

Operator

The next question is from Larry Biegelsen with Wells Fargo. Please go ahead.

Speaker 10

Good afternoon. Thanks for taking the question. I wanted to I have 2 questions, 1 on RevCorp, 1 on competition. But I was hoping you could answer Travis' question On Q1, last year, you were up 4% sequentially. Consensus has you down 3% sequentially.

Speaker 10

If I missed it, I apologize, but I did hear you kind of respond to that part of his question.

Speaker 3

Yes. So Larry, It's a

Speaker 4

little tricky here. As you obviously know, being 6 weeks into the quarter, we've not had a habit historically of commenting And a lot of specifics on intra quarter trends, given some of the competitive noise, we did want to at least acknowledge that we had January February, as 2 of among our strongest months ever. We did want to make sure people heard that. Beyond that, I'm not sure what additional color we're comfortable providing this point in the quarter. The consensus number has not been updated, as you know, since we Put out guidance at the beginning of the year at the conference in January.

Speaker 4

Mitch, would you want to add anything beyond that on guidance? And then I can follow-up on the RevCorp and the competition.

Speaker 5

Sure. I mean, Larry, the Q1 certainly we like what we're seeing. We're bullish about the quarters as Drew mentioned. And that's all I think very positive, but we've yet to start the month of March. It's a big month.

Speaker 5

It has a lot of operating days in it and so we don't want to get ahead of ourselves And I think we're also sensitive as you can expect to this concept of kind of giving the inter quarter Guidance for the business, I think we're just trying to help people understand that we're continuing to feel very confident in our plans for 2023 and 2023 is off to a great start.

Speaker 10

Okay. That's helpful. Hey, Drew, on so Revcore and competition. So Revcore, I'm sorry, yes. Can you talk about the market opportunity, the mechanism of action?

Speaker 10

And do you think it's going to work for acute and chronic venous Clots and clots, and I did have one follow-up.

Speaker 4

Yes, I can get started. Tom may want to chime in Clinically as well. So Revcor, you may recall, is a product that we designed specifically for instent thrombosis. So lots of venous stents being implanted and many of those stents go down over time and have thrombosis and clot forms inside the stent. Today, no good solutions or certainly no purpose built solutions to address that clinical problem, and that's exactly, what we have targeted Revcor to address, a way to safely and effectively, remove clot from an implanted venous stent.

Speaker 4

Tom, would you want to add anything clinically beyond that?

Speaker 7

Sure. So Larry, as you know, our customers are highly creative interventionists that will use Tools that have FDA approval in any manner that they think might help their patients. So although Revcor It's purpose built to address the instant thrombosis problem that currently has no good solutions. We think that potentially physicians will find additional uses for it in their VTE armamentarium.

Speaker 10

Okay. I got it. All right. So on the competition, so obviously Penumbra is comparing Lightning Flash To your products and their promotional material, it sounds like Drew on this call you're saying you believe you can remove more clot with less blood loss. And I heard that both for, I believe, DVT and PE.

Speaker 10

So I guess my question is, 1, is there any way to quantify this? How do you quantify this, I guess? And 2, the case you mentioned upfront with the new 16 French I have to believe that was lightning flash. So my question is, how common do you think a 1,000 milliliters A blood loss is that that sounds like an outlier. I'm just curious.

Speaker 10

So a little more quantification of why you believe the reasons that your products are better. Thank you.

Speaker 4

Sure. So the first part of your question related to Clot removal and blood loss. Thankfully, we can point to the 2 largest prospective Registries ever conducted in venous thrombectomy to use data to answer the question how effective does clot treat or remove clot. You can look at the CLOUT data and see very effectively the vast majority of patients we removed the vast majority of clot regardless of chronicity. Blood loss in the clot registry was 40 milliliters.

Speaker 4

So you can see very objectively in the data The kind of performance that we have from a clot removal and blood loss perspective, see the same thing when you look at FLOTRIVER relative to the Flash industry blood loss there for instance you heard in the prepared remarks 100 milliliters. We've had line of sight To a couple dozen, CAT 16 cases at this point And the average blood loss that we're seeing catalog in those cases is north of 500 Milliliters, certainly a 1,000 milliliters is north of that even. Keep in mind that's a pretty significant part of the overall blood volume, 20% of the blood volume. So obviously a very significant clinical finding to have that amount of blood loss. And it's not insignificant.

Speaker 4

Tom can talk more specifically about some of the clinical implications, but blood loss is a known risk factor For all interventional procedures and venous thrombectomy is no different.

Speaker 10

Okay. Thank you very much.

Speaker 5

Thanks, Larry.

Operator

The next question is from Adam Maeder with Piper Sandler. Please go ahead.

Speaker 8

Hi, good afternoon guys. Thank you for taking the questions. I wanted to start on guidance construction And test my luck there. I guess as we look at the 23% to 25% year over year growth, Is it reasonable to think that 20% plus of that growth is from the core business? And can you just elaborate a little bit how you're thinking about clot

Speaker 4

Yes, I can get started on that Adam and Mitch may want to chime in as well. I think the way we constructed guidance, as you heard Mitch Mentioned earlier, we were very deliberate about contemplating all the different dynamics across the business, The core business, the new TAMs, U. S, OUS, competitive dynamics, pricing, all of those factors We're contemplated in the guidance. It was at the same time I think largely driven by or reflective of Our confidence in the continued growth of the core VTE franchise here in the U. S, That's obviously the largest part of the business still, the part of the business we have best line of sight and can forecast most confidently.

Speaker 4

So that 24% growth at the midpoint, I think, is clearly driven by and reflective of our confidence in the core franchise. And then as you add on the new products and the new TAMs, I think it's additive to that core and then clearly continued traction Internationally is also additive to the core. Relative to the composition between Clotriever and FlowTriever, I think Just like we saw in Q4, we would anticipate continued balanced growth across the franchise. That mix and the contribution of the 2 on a relative basis has been fairly consistent. Over time, we see some quarter to quarter fluctuations.

Speaker 4

But as we thought about guidance this year, I think by and large we contemplated a relatively consistent balanced Contribution from both FlowTriever and Clotriever.

Speaker 8

That's really helpful, Drew. I appreciate that. And I guess just one clarification Jen, as it relates to Ardix, so when you issued the guidance in January for the first time for 2023 revenue, With anything baked into that guidance range for Ardix, I just wanted to clarify that. And then for the follow-up, I was hoping you could just talk a little bit more about the FLAME study that you have at ACC In the coming days, I think you've talked about potential to eventually change guidelines And I think you're hopeful that Flowtreaver will see an outsized benefit there. So maybe just kind of walk through Time lines there and how you think about potential impact to

Speaker 3

your business? Thanks for taking the question. Sure.

Speaker 4

Yes. No, Thanks for those Adam. I can talk about ARDX and guidance and then I'll invite Tom to talk about Flame from there. But to answer your question on ARDX, Yes, there was a modest amount of Ardex revenue that was included in guidance back in early January. At that point in time, the LMR was still underway.

Speaker 4

But keep in mind that was the smallest of the new TAMs, and as a result had an even more modest Contribution or contemplation within the guidance and despite us making the decision that we need to do more work Before that product is ready for prime time, we feel as though we've got plenty of other levers and offsets to the modest contribution that was factored into the guidance. So we still feel really confident In the 475 as you heard Mitch talk about and that's despite the incremental news on ARDEX. So with that, maybe I'll turn things over to Tom and he can tackle the Flame questions.

Speaker 7

Thanks Drew. Yes, so Adam, thank you for the about FLAME. As you can tell, we're very excited about this data release, because it is the largest ever Interventional study for high risk PE. This is a group of patients with a predicted mortality anywhere from 25% to 50% And frankly, the existing solutions even guideline directed solutions are unsatisfactory for this patient population. So, if these trial results are positive and are well accepted, I think there is a very good chance That Flowtrever will make its debut in guidelines for the treatment of this patient subset.

Speaker 7

And I do think Flotriever will get the outsized benefit for two reasons. First of all, we're the ones who've invested the hard work in Studying these patients and establishing our technologies through rigorous scientific methods. And I think, the Physicians making choices about patient care acknowledge that. Secondly, we have quite a bit of real world data that suggests that our Treatment effect is not a class effect. We have a unique mechanism of action.

Speaker 7

Our safety profile is pristine and I think because of that You're going to see further publications that distinguish our treatments FLOWTRIVER and CLOTREVER from other similar Mechanical thrombectomy approaches which is why I believe, Inari is going to get the nod in terms of specific mention in guidelines.

Speaker 8

Very helpful. Thank you.

Operator

Thanks, Adam. The next question is from Marie Thibault With BTIG, please go ahead.

Speaker 2

Hi, Mitch. Hi, Drew. Hi, Tom. Thanks for taking the questions this afternoon. I wanted To start here with international, would love to hear a little bit more about that market in terms of how you're pricing the devices And where that could go over the next year?

Speaker 2

So you mentioned obviously some very nice percentage growth metrics here in the Q4, but just wondering Should we expect to see a doubling in revenue? Can you give us kind of a sense of how you're thinking about the international growth expansion this year?

Speaker 4

Yes. Thanks, Maria. I can get started on that and Mitch may want to pile on as well. But yes, we're excited to break out international For the first time, you heard the $9,000,000 in revenue for 2022. I think it continues to reflect the traction and the investment that we have made And the unmet need that exists internationally, much of that growth being driven at this point still out of Europe.

Speaker 4

We've got a nice commercial footprint that has now been established. We're doing cases now across all of those markets. We've got incremental reimbursement Established as you've heard us talk about in Germany. We recently got some incremental reimbursement established in France. Each month, each quarter that goes by, we continue to see nice traction coming out of Western Europe, But still lots of work to do.

Speaker 4

I mean, we're still very, very early in the rollout and the penetration rates in that market, even more modest at stage than what we see here in the U. S. It is clearly included in the guidance as you've heard us talk about. I don't think we'll break out specifically necessarily the dollar amount, but we would continue to anticipate robust growth Internationally driven by primarily at this point still Western Europe. Pricing has been candidly better than we had anticipated when We got started internationally a couple of years ago.

Speaker 4

In Europe, we have a mix of primarily direct markets and then we're indirect in some of the Southern European markets for instance. But by and large, the margin profile Has come together much more strongly than even we had anticipated. It doesn't quite compare to the U. S. Margin, so it does

Speaker 2

From a

Speaker 4

regulatory standpoint to get on market in Japan and China, we're increasingly focused on exploring what the go to market strategy will be in those two respective markets. And then we're opportunistically continuing to do cases and add new markets globally. I think we're north of 20 some markets now in total internationally. So we're doing cases now in Australia and New Zealand, Singapore, Chile, Colombia, Fairly large list now, all still relatively early, but again, this is a key growth driver for us. And I think over time, We'll be an increasingly important contributor not only to our growth, but also the kind of clinical impact we're having on patients.

Speaker 2

Okay. That's really helpful. Thank you.

Speaker 5

Sorry, Marie, just to add, I made a brief comment there about the portion of our operating loss that's Related to the international business, we believe that this is a very worthwhile and significant and important investment for the company. And that's why we're willing to kind of deal with that. And as time goes on, we believe this will actually be a significant part of the company's Overall revenue picture. And so I think that could be a few years hence obviously. But we're very excited about the international prospects And we see some really positive developments for the business coming up in 2023.

Speaker 2

Okay. Very helpful. Thank you for that. Maybe my follow-up here, if you could give us any details, it's hard for us to track given we don't have a lot of Real numbers from some of your competitors. What is your latest market research on sort of market penetration of VTE and then your own market share within that penetrated portion at this point.

Speaker 2

Any detail there is helpful. Thank you.

Speaker 4

Yes, Marie. I'll do our best. As you point out, it's sometimes a difficult market to triangulate on. Most of the competitors have their results kind of buried within much larger portfolio. So, we believe if you start at the highest level The overall incidence of VTE, we believe that market is growing in the low single digits alongside population growth.

Speaker 4

If you look at the penetration within that broad group of patients of any interventional therapy today, Both legacy lytic based interventions as well as mechanical thrombectomy interventions like Inari, we believe in both DBT and PE, the interventional penetration is is still somewhere between 10% 15%, very, very modest. Vast majority of patients still Getting treated with conservative medical management, anticoagulation alone. If you look at just then the sliver of interventional treatment, We believe lytics still today are being used in nearly half of those interventions, still today despite all the traction of mechanical thrombectomy. And if you looked at mechanical thrombectomy as a subset of that interventional market, We believe that segment is growing easily at 20%. So those numbers are all estimates and come with fair amount of art and science to arrive at those estimates, but hopefully that gives you some sense of how we view the market and some of the Estimates that we're making across the board.

Speaker 2

All right. Thank you.

Speaker 3

Thanks. Thank you, Maureen.

Operator

Excuse me. The next question is from Bill Plovanic with Canaccord. Please go ahead.

Speaker 11

Hey, great. Thanks. Good evening. Thanks for taking my questions. I'd like to get a little clarity on the FLAME data that's coming out in the commentary That this could really change guidelines.

Speaker 11

And just, Tom, help us understand, if we see the stated ACC and it's super powerful, What is the process in terms of guidelines getting changed? Like how long would that take in your opinion? And then how long do you think that takes to flow down to kind of everybody else? And that's I'll have a follow-up. So let's start with that please.

Speaker 7

Well, thanks for the question, Bill. So of course the FLAME study design has been published already. So that is public information and certainly anything that affects A baseline mortality of 25% to 50%, I think could be paradigm shifting in this space. Now we all talk about guidelines and standard of care and I just want to be a little more particular because those 2 are not interchangeable. Yes, standard of care is what doctors do.

Speaker 7

Guidelines are simply what's codified in some kind of expert consensus document. And I wouldn't necessarily portray it as behavior flows down from guidelines. I think it's a two way street. It is quite likely that the compelling data that is presented at ACC next week is going to immediately shift Behavior patterns of physicians that are already kind of on the cusp of change of practice patterns. I think guidelines are written by various physician organizations.

Speaker 7

They all have different schedules on when they meet, how often they meet, how often they update Their guidelines although it is not unheard of for out of sequence meetings to be held and guidelines to be updated when compelling data is So certainly that could be the case. But we may certainly see behavioral changes well before you see any Codification in printed guidelines.

Speaker 11

Great. And then just the clarification, I know there's been Obviously, a lot of questions around just the guidance. But I just wanted to confirm that and I heard this right, The January February were the 2 best months for the company in its history. Is that accurate?

Speaker 4

Yes. What we said in the prepared remarks, Bill, were that January February were among the strongest months we've ever had. And obviously, February is not quite over yet, but that's the way we framed it.

Speaker 11

Okay. And then just again with I think Mitch's comment that and then March is a longer than typical month.

Speaker 4

Yes, certainly relative to February. And I think the way the calendar shapes up this year, I think there's Even more working days, if you will, in the month of March.

Speaker 10

Okay. That's all I had. Thanks for taking my questions.

Speaker 12

Thanks, Phil.

Speaker 3

Appreciate it. Thanks, Phil.

Operator

The next question is from Mike Sarcone with Jefferies. Please go ahead.

Speaker 13

Hey, good afternoon and thanks for taking my questions.

Speaker 5

The first one,

Speaker 13

I think for Mitch. Mitch, You had mentioned when you were talking about 2023 guidance that you also incorporated pricing trends and dynamics. Do you think you can just walk us through how ASPs trended through 4Q and then what you're expecting in 2023?

Speaker 5

Yes. We've been very pleased with the pricing performance of the business really throughout the year 2022. And so it's been a stable market for us. And as we've added value to the Flow Trever toolkit and we're sort of heading in the direction of Toolkits for clot retrieval and eventually for chronic venous as well, we're looking for ways to make sure we can sell based on value Rather than sort of price based competition, I think we've been successful as our hospital contracts roll over to Emphasize the value and the kind of the clinical outcomes that the treating physicians are able to Gain with these products and as well, we have a we're in a nice position because But as a lytic free treatment, we're able to keep patients out of the ICU. So from a hospital point of view, the concept of mechanical thrombectomy without lytics is something that tends to be a positive margin contribution procedure for the hospitals.

Speaker 5

Whenever hospitals resort to the use of lytics for the treatment of DT, it becomes a loser for them based on the reimbursement profile either for DVT or PE. So that helps us as well in these price discussions and negotiations with our hospital customers as these contracts roll over. So we're continuing to be optimistic about the opportunities to selectively take price As these hospital contracts roll over and we were able to basically bundle more value into our product offering.

Speaker 13

Okay. Thanks, Mitch. And just one follow-up for Tom. Just on the FLAME data, Tom, you've mentioned a few times that If the data looks good, not only could this help change guidelines for high risk, but maybe it could also drive adoption in intermediate risk. Could you just talk about what the strategy and the messaging there looks like for the intermediate risk population And how long it might take before you could see some incremental impact from positive flame data?

Speaker 7

Sure. Happy to answer that one pretty quickly. So, the high risk PE patient population although very compelling and very high risk constitutes really only 5 to 10% of the overall PE patient population. So I think you might see some immediate messaging around that population. But I think it stands to reason, if you can get excellent outcomes and safe procedures in the sickest of the sick patients, Why wouldn't you want to offer that kind of therapy for the patients who are little more stable but much more numerous.

Speaker 7

And I think That kind of justification could be very compelling for the bulk of our customers out there. Understand that we're simultaneously gathering randomized data in those patient population. So more data will be forthcoming. But in the meantime, I think the FLAME Data results could move even the middle of the pack there as far as intermediate risk patients.

Speaker 13

Okay. Thanks, Tom.

Operator

The next question is from Richard Newitter with Truist. Please go ahead.

Speaker 12

Hi, thanks for taking the questions. Maybe just to start, on the international contribution, Could you give us a sense, do you think international as a percentage of sales is going to increase in 2023?

Speaker 4

Yes. So I think we're relatively early Obviously, in the international rollout, it's a very modest percent of sales you saw someplace in the low single digit I think as we continue to ramp internationally and gain traction in Europe And then as in particular as we start adding some of the larger markets in Asia Pacific, both Japan and China, I think over time, clearly it will become a larger and larger percentage I got to think, of course, it's going to be north of where it was in 'twenty two. Beyond that, I'm not sure we're going to put a specific number to it, but it is clearly growing Faster than the broader business now, albeit a pretty modest base still.

Speaker 12

Okay. That's helpful. Thanks. And then Maybe just on the new products and the pricing strategy there. It's still early.

Speaker 12

This is a little bit different than the way you've priced your portfolio Historically, so I'm just curious on how you arrived at the price point, particularly ProTree4000? How the pricing Strategy is going so far for some of these newer products. What are you learning? Do you think there will need to be any fine tuning? And then I'm just curious from a modeling standpoint, How we should be thinking about or modeling specifically pricing here?

Speaker 12

Is this just ASP lift For DVT on Protrieve or I'm just trying to think from a modeling standpoint what you may or may not disclose going forward, so we can parse out The contribution from core USVT. Thanks.

Speaker 4

Yes. So I think pricing is going to have multiple elements, I think most importantly, we're going to continue to try and take price relative to the established Flowtreever and Clotriever franchises. You heard Mitch describe some of those dynamics. And I think leveraging the broader economic value proposition, leveraging some of the new introductions we brought under the PPP models, I think, gives us some confidence we're going to be able to maintain, if not take price, with the core part of the business. As we Bring out some of these new products, we have priced some of them outside of those PPPs.

Speaker 4

ProTrieve and Enthral are the first two examples of those. Those pricing those price points were established based upon understanding the Hospital economics, understanding the clinical unmet need, understanding the physician economics, all of the traditional inputs are reflected in those $2,000 $4,000 price points. And I think as you look across the introductions that are coming in the pipeline, I think you'll see again a mix of us adding new products Under the PPP as well as pricing products outside the PPP as you saw us do with ProTrieve and Enthral. And I think Those strategies will be specific to the products as they enter the market.

Speaker 12

Okay. And sorry, just one last one. On the taking price, did you are you starting to do that in the first half of this year or is that more of a second half twenty twenty three opportunity for you? Thank you.

Speaker 4

Yes, I don't think we've ever stopped trying to take price. Most of our contracts are multi year. So most of that work takes place as contracts expire. But we've got 9 products now in the Flowtreaver toolkit. And I think as we built out that toolkit, for instance, and those contracts have come up for renewal, that's something that we're always focused on.

Speaker 4

That will be true here in the first half of the year and looking out to the back half of the year as well.

Speaker 12

Thank you very much.

Speaker 4

Thanks, Richard.

Speaker 11

Thanks, Richard.

Operator

This concludes our question and answer session and the conference has also now concluded. Thank you for attending today's presentation. You may now disconnect.

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