Inari Medical, Inc. NARI is well-poised for growth on the back of a huge market opportunity for its products and its commitment to understanding the venous system. However, the company’s dependency on the adoption of its products is concerning.

Shares of this Zacks Rank #3 (Hold) company have gained 68.3% in the past six months compared with the industry’s 7.2% growth. The S&P 500 Index has risen 15.6% in the same time frame.

NARI, with a market capitalization of $4.66 billion, is a commercial-stage medical device company. It seeks to develop products for treating and changing the lives of patients suffering from venous diseases.

The company’s negative earnings yield of 0.2% compares favorably with the industry’s (-3.3%). It delivered a trailing four-quarter average earnings surprise of 24.77%.

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What’s Driving NARI’s Performance?

Inari Medical has positioned itself as a leader in the treatment of venous thromboembolism (VTE) through its innovative ClotTriever and FlowTriever products. With a significantly underpenetrated market and a growing demand for mechanical thrombectomy, Inari’s top-line growth is expected to continue its upward trajectory.

VTE remains a critical health concern, affecting an estimated 1.9 million people annually in the United States. Traditionally, conservative medical management with anticoagulants has been the standard of care. However, the increasing adoption of Inari’s ClotTriever and FlowTriever systems highlights a paradigm shift in treatment preferences. With approximately 430,000 deep vein thrombosis (DVT) and 280,000 pulmonary embolism (PE) patients eligible for these therapies, the addressable market is substantial.

During the latest quarter, Inari’s global VTE business recorded a revenue increase of 19.7% year over year, totaling $145.3 million. This growth reflects the rising acceptance of mechanical thrombectomy and the company’s commitment to market development. As NARI continues to evaluate patient outcomes and promote its products as the standard of care, further market penetration is expected.

Inari’s commercial expansion strategies have been pivotal in driving revenue growth. Beyond VTE, it is making strides in emerging therapies, particularly with RevCore and Venacore. The latter, which is currently in a limited market release, is expected to bolster revenues as it expands NARI’s portfolio within the CBD toolkit.

Another notable development is the limited market release of the LimFlow system, aimed at treating critical limb ischemia. The recent reimbursement approval through NTAP, effective October 2024, is expected to enhance adoption rates, setting the stage for a full commercial launch in 2025. As reimbursement structures evolve, these emerging therapies are likely to contribute significantly to revenue growth.

Inari is actively pursuing global expansion, particularly in Asia. The company has gained regulatory and reimbursement approval for ClotTriever in Japan, positioning it for market entry. Additionally, its joint venture with 6 Dimensions Capital aims to provide access to Inari’s technology in Greater China, addressing a large unmet medical need. Management anticipates international revenues to exceed 20% of total sales in the future, marking a crucial growth avenue.

Investors may consider adding NARI to their portfolio following Stryker’s acquisition announcement at $80 per share, offering a premium over its prior trading price. This presents a short-term arbitrage opportunity with a relatively low-risk return if the stock trades below the offer price.

Stryker’s acquisition validates Inari’s strong position in the venous thromboembolism market, highlighting its long-term growth potential. Additionally, there’s a possibility of higher bids or improved terms. While the deal is expected to close by the first quarter of 2025, investors should consider regulatory risks. Overall, NARI presents attractive short-term gains and strong long-term fundamentals.

What’s Weighing on the Stock?

Although ClotTriever and FlowTriever have attractive reimbursement coverages, these are determined by government agencies, private insurers and other payors for a particular procedure, irrespective of the devices used. Meanwhile, third-party payors are increasingly limiting coverage and reducing reimbursements for medical products and services.

In addition, the U.S. government, state legislatures and foreign governments have continued implementing cost-containment programs, including price controls, restrictions on coverage and reimbursements. Any unfavorable change in coverage for Inari Medical’s products will likely hurt their adoption, affecting top-line growth. Moreover, expansion in international markets is a greater risk as several countries are unlikely to have extensive reimbursement coverage, which may adversely impact adoption.

Inari Medical is currently facing a civil investigative demand from the U.S. Department of Justice, Civil Division, in connection with an investigation under the federal Anti-Kickback Statute and Civil False Claims Act. According to the department, NARI might have been involved in influencing healthcare professionals to prescribe its products. Any unfavorable ruling should be a setback for the company that may lead to lower demand for its products, hurting sales growth.

Estimate Trend

The Zacks Consensus Estimate for the company’s 2025 revenues is pegged at $710.4 million, indicating a 17.8% increase from the previous year’s reported number. The bottom-line estimate is pinned at 15 cents, implying a 121% improvement from that recorded a year ago. In the past 60 days, earnings estimate improved from a loss of 4 cents per share.

Inari Medical, Inc. Price

Inari Medical, Inc. price | Inari Medical, Inc. Quote

Key Picks

Some better-ranked stocks in the broader medical space are Cardinal Health, Inc. CAH, ResMed Inc. RMD and Inogen INGN.

Cardinal Health, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 10.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.64%. Its shares have risen 27.2% compared with the industry’s 5.6% growth in the past six months.

ResMed, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 16%. RMD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.86%.

ResMed’s shares have gained 11.5% compared with the industry’s 15.4% growth in the past six months.

Inogen, carrying a Zacks Rank of 2 at present, has an estimated growth rate of 14.5% for 2025. INGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 12.4%.

Inogen’s shares have rallied 46.4% compared with the industry’s 8.8% growth in the past six months.

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