Inari Medical, Inc. (NARI) Q2 2022 Earnings Call Transcript

Inari Medical, Inc. (NARI -3.16%)
Q2 2022 Earnings Call
Aug 03, 2022, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

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 -- Investor Relations

Thank you, operator. Welcome to Inari's second quarter 202 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 in 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 large 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 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 the 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. 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 p.m.

[inaudible] time today. Now I would like to turn the call over to Bill for his comments and second quarter 2022 business highlights.

Bill Hoffman -- President and Chief Executive Officer

Thank you, Caroline, and thank you, everyone, for joining us today. After nearly eight years as CEO of Inari Medical, I am pleased to announce the transition of the chief executive officer role and responsibilities to Drew Hikes, effective January 1, 2023. The I have loved every second 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 watch, 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. A couple of months ago, 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 lung.

His physicians used FlowTriever along with FlowSaver to wish 12 times until all of the clot was removed from his loans. The procedure was completed in 52 minutes. His pulmonary artery pressures, heart rate and breathing return to near normal levels immediately, and he was discharged from the hospital within 24 hours. The 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 this 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 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 resources 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 -- Chief Operating Officer

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 contribution to Inari over these last eight years. When Bill started at the company, we are a scruffy 10-person venture-backed start-up with no approved products.

Today, we're an established public company, with over 1,000 ClotTriever, 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 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 comes 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 transition 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 professions we had 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 year, and we're optimistic about the back half of 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 on some exciting news here. First, a subgroup analysis of the FLAME 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 FlowThrough was again exceptional. No major adverse events, no 30-day readmissions and all can mortality was less than 2%. Both the excellent safety and efficacy results were statistically indistinguishable from the broader and less stressed population of FLAME patients. These results are unprecedented in the PE thrombectomy [inaudible].

Competitors have sometimes suggest FlowThrough proceedings are deliveries. This is simply not true. Next, the PEERLESS randomized controlled trial is enrolling nicely. PEERLESS, as a reminder, a superiority trial comparing FlowTriever against catheter-directed thrombolytic for intermediate high-risk PE patients.

Looking ahead to the fall conference season, we expect to report out both the the complete 500-patient CLOUT DBT data set and 800-patient U.S. cohort of the FLASH PE data set 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 established 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. Several 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 cost from the procedure, further improving economics for the hospital. [inaudible] 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 guide sheet and the Protea 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 markets 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 good case growth during the quarter in Latin America, Canada and Asia Pacific, albeit off a still modest base.

We're working toward additional market launches across the geographic regions during the back half of 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 are 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 investors well. I'd like to close by restating that we believe can and will grow consistently for many quarters to come. Our markets are large, the patient needs are significant, and we serious about our responsibility to do better for 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 -- Chief Financial Officer

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 was 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 have 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 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 $338.7 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 million to $370 in revenue.

With that, I'd like 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.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Cecilia Furlong with Morgan Stanley.

Cecilia Furlong -- Morgan Stanley -- Analyst

Great. Good afternoon and thank you for taking the questions. Bill and Drew, congrats on your upcoming new roles as well. But I wanted to start just kind of 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 and capacity standpoint?

Unknown speaker

Drew, you want to get started on that? Thank you, Cecilia.

Drew Hykes -- Chief Operating Officer

Yes. Thanks, Cecilia. Yes. 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 staffing shortages -- We're present in essentially all of our accounts to some level across the country. And we see those staffing shortage manifest themselves in reduced interventional capacity. We see them manifest themselves in fewer staff beds 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 that, we still see those headwinds out 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 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 empathy, 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 -- Analyst

Makes a lot of sense. And if I could follow up to just your comments on what you saw in the quarter with [inaudible]. 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 with 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 Chief Executive Officer

Keep going.

Drew Hykes -- Chief Operating Officer

Sure. So, Cecilia, 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 procedure.

Up until entry, we've been relying on a third-party sheet from another manufacturer that was candidly difficult to [inaudible] 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 stock that's used essentially in 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.

Cecilia Furlong -- Morgan Stanley -- Analyst

Thank you for taking the questions.

Drew Hykes -- Chief Operating Officer

Thanks, Cecilia.

Unknown speaker

Thank you.

Operator

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

Larry Biegelsen -- Wells Fargo Securities -- Analyst

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 Chief Executive Officer

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

Larry Biegelsen -- Wells Fargo Securities -- Analyst

So two for 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 are easier. So I guess my question is, is there something you're seeing in the environment that has 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 had one follow-up.

Drew Hykes -- Chief Operating Officer

Yes, I can get started on that one, Larry, and maybe Mitch sure Bill will 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 that we've just brought on board will be ramping their productivity as we move through Q3 and particularly into Q4, they'll be hitting kind of the sweet spot of their productivity. We've got important readouts coming in in both CLOUT and FLASH. In fact, FLASH, the TCT just announced a late breaker for our 800 patient data set for flash.

We've got another one coming for -- 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 staffing shortages in mind as we reaffirmed guidance for this point forward.

Larry Biegelsen -- Wells Fargo Securities -- Analyst

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 Chief Executive Officer

Yes. Maybe I can dive in there, Larry. So we -- the -- 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 in nearer range product offerings.

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 that is transformation in the organization. I think it's underway. I mean 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 financial -- 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 see at least already confirm that we're going to return to operating close to profitability, a little above, a little below, by next year.

So I think we have plenty of discretion in terms of the way that we deploy resource 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 we -- the largest class that we've ever hired begins to hit the sweet spot on their productivity curve. So anyway, lots more to share here, Larry. We'll get another six weeks or so before that Investor Day.

So stay tuned.

Larry Biegelsen -- Wells Fargo Securities -- Analyst

All right. Thanks so much.

Drew Hykes -- Chief Operating Officer

Thanks, Larry.

Operator

We have a question from Marie Thibault with BTIG.

Marie Thibault -- BTIG -- Analyst

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.

Bill Hoffman -- President and Chief Executive Officer

Yes. any time.

Marie Thibault -- BTIG -- Analyst

I wanted to touch here on the new sales reps. You mentioned over 100 in the first half of this year. I think, Bill, you were just talking about the sweet spot on their 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 Chief Executive Officer

Drew, you want to tackle that?

Drew Hykes -- Chief Operating Officer

Yes. Thanks, Marie. Yes, 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 as small a 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 kind of growing into the investment that we made in in pulling 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 kind of 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 -- or essentially all of our new rep ads are stepping into some kind of established territory and it's some kind of a split. So, they have existing accounts that they're inheriting and that also helps the reps come up 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 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're really 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 burdened class.

Bill Hoffman -- President and Chief Executive Officer

If I may just add one thing there, Marie. One of the things that we've seen and -- well, I think it's obvious in the P&L is that our commercial system has been incredibly efficient, right? It's the productivity of sales Entry 24 Sheath in the presence of a really strong gross margin that has put us in a position much earlier in our commercial history, in our industry 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 [inaudible] 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 in the first month, and we have a bunch of them now literally in their first month. 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 chance -- we give too many these territories a chance to make sure beyond 12 months before they're split. So we really -- and that's why we're quite optimistic as we get to the back end of year and into next year, not only in in terms of growth, but also terms of the net income and net operating line.

Marie Thibault -- BTIG -- Analyst

Yes. That's very helpful. Maybe I can segue to my next question from what Drew mentioned about the burden on P&L. Mitch, you gave us a good sort of 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 sort of the expense outlook here for the rest of year?

Mitch Hill -- Chief Financial Officer

Yes. Thanks, Marie. The -- 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 talked about that, and that's also reflected in the guidance which we provided. So that's kind of the top line 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 sort of cost of that mega class that we hired kind of hitting the P&L in Q3. We're kind of looking at more probably levels of consistent spend in some the other opex categories for the business.

But impact of that, I think, could take us from, let's say, the $9.3 million operating loss that we just reported to something that could be in the kind of the low to mid-teens, I'd 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 sort of 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 this sort of the longer-term opportunity for profitability of the company.

We have all the ingredients that they're really terrific business that will be a sustained producer of significant operating profits for the company. If you look at the market opportunity, you look at the productivity of sales team, you look at the gross margin of 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 to. We're 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 -- Analyst

OK. Very good. I wonder if I could sneak one last one here at the risk of pushing my luck. I just want to to circle back 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 kind of range? Was it low teens percent of revenue, somewhere in that range?

Mitch Hill -- Chief Financial Officer

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 kind of percentage figures for stocking revenue and procedure counts and things like that. As Bill and Drew both mentioned in their remarks, we -- we're really pleased with the performance of the Entry 24 Sheath, and way that was accepted by our customers for the -- for all the reasons we discussed.

And so there was definitely some revenue that probably move forward in time. So kind of from the Q3 time frame 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.

Marie Thibault -- BTIG -- Analyst

OK. Got it. Thanks so much.

Operator

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

William Plovanic -- Canaccord Genuity -- Analyst

Great, thanks. Good evening. Can you hear me OK?

Bill Hoffman -- President and Chief Executive Officer

Yes, we got you.

William Plovanic -- Canaccord Genuity -- Analyst

Great. Thanks. I look forward to giving you my congratulations when I see in person next month. So my questions here.

First on product. Any feedback you can provide on the [inaudible] balloon? And when do you think that -- is that one of the products that is slated for full market launch in the half of the year?

Bill Hoffman -- President and Chief Executive Officer

Yes. Why don't you jump in there, Drew?

Drew Hykes -- Chief Operating Officer

Yes. So, Bill, you know that we had the first component of that Arctic 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 Arctics Balloon Guiding Sheath, which we just got clearance for within the last couple of weeks. We've got now those first two components of the overall Arctics system underway in our LMR, 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 Arctics system. And I think we get to that point, we'll be in a position to talk more -- 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 kind of normal approach here, 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 -- Analyst

OK. Great. 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 you at? Just how is this kind of progressing? And do you expect having -- how much impact do you expect to have VTE coordinator is going to help out in terms of -- especially with the stocking issues and any [inaudible] you guys can give along with the hospital with the facilities?

Drew Hykes -- Chief Operating Officer

Yes. So, Bill, we're making good progress quarter after 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 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 kind of fragmented care, that lack of a 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 kind of refine and hone and iterate improve that overall program, but we are seeing success in moving accounts along the continuum from what we call ENGAGE into Empower and finally, Excel. 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 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 kind of scope of work gives the biggest impact where they can really help move the needle most efficiently at 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.

Tom Tu -- Chief Medical Officer

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 -- Analyst

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

Mitch Hill -- Chief Financial Officer

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

So there hasn't been any really meaningful changes there on the pricing side. That's been something we've obviously been pleased to see as we're building the business. Certainly, with the macroeconomics 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.

Bill Hoffman -- President and Chief Executive Officer

Yes. I want to add one more thing. So yes, pricing has been rock solid, if anything, just a minor little tick upward as contracts expire and so forth, but 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 a challenging operating environment.

The other thing I want to say, though, we guided kind of 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, but 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 of the -- in in the uptick adoption of the entry sheath.

But overall, I mean, for the -- 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 guidance where we had it. That does imply pretty significant Q4.

William Plovanic -- Canaccord Genuity -- Analyst

OK. Thanks for taking my questions. Thanks, Bill.

Operator

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

Adam Maeder -- Piper Sandler -- Analyst

Hi. Good afternoon. Thanks for taking the questions. And I'll echo my congrats, Bill and Drew, on the transition.

Maybe just to start, I wanted to ask one on the operating environment, just looking for a little bit more color or detail in terms of kind of what you're seeing there, given some the headwinds you called out? Are you able to share volumes and kind of how those trended over a month-over-month basis in Q2? And then what have you guys seen kind of play out thus far throughout July? And then I have a follow-up.

Drew Hykes -- Chief Operating Officer

Yes. So 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. Contract shortage, I think, clearly, we're present for most of the quarter, but I think as we exited Q2, began to see those contract shortages begin to lift in many accounts.

I'm sure that's consistent with 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 their ability just to staff the number of beds that they have and carry a full census and have the kind of 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 account base.

Adam Maeder -- Piper Sandler -- Analyst

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

Tom Tu -- Chief Medical Officer

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. The -- arguably, the 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 a 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 data set 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 kind of 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 boots on the ground, trench warfare, convincing hearts and minds one at a time.

Bill Hoffman -- President and Chief Executive Officer

If I may just underscore one thing. I want to make sure this is highlighted. We -- the fact that TCT is that PE and our FLASH registry is going to be front and center on the [inaudible] at arguably the most important interventional conference in 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.

And of course, 800 patients, 800 patients 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 points. This is a grinded out execution play, and we've been pretty good at that.

Adam Maeder -- Piper Sandler -- Analyst

Thanks for the color.

Operator

[Operator instructions]

Mitch Hill -- Chief Financial Officer

Sorry, I might actually jump in there. We're having some technical problems with [inaudible], but Travis had a question for the team here. I'll go ahead and ask that since he's not able to connect dragging some challenges with the phone, but 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 Chief Executive Officer

I wish Travis were here. I'd like to say hello to him, too. Yes, we've had -- I think you've heard we've had some technical challenges here in the new system. And so thanks for your attention for bearing with us.

Somebody's children were very, very sad to see me go, and I was happy to hear that. So thanks, Travis. Look, there's 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 as a previous company that was acquired. And it's a long time and been grind. Maybe some people signed 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 his team. I really love it. But I've had no time to love much of anything else. So hoping to spend a little 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 mean, I think even in your question is wrapped up -- the answer is wrapped up in the question. The company has never been in better shape. I mean the pipeline is full of new products. We have a 1,000-plus CLOUT warriors.

The sales team now is more than 300 people all in with managers and so forth. All the growth drivers in great shape. Tom just described 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 years being spectacular for 2022 doesn't end, right? There's 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, his training, his problem-solving skills, the single 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've promoted him to COO a couple of years ago was because he's 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 -- conceived -- 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 mission.

So it seems like a pretty good time. Let me just say one last thing. When we raised money maybe three or four months ago, everyone asked, you 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 think at that point, if I were you, the question that I think you really want to ask, but you were all too naive 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 $1 billion or $0.5 billion on a new company, something like that. And I think the same question is true now. Is there something else? And hopefully, it's pretty apparent that the company is in fantastic shape, and we have the [inaudible] to probably a better CEO in waiting than we had exiting, and that is an exciting time for the company.

So I'm really excited for 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 and the impact that he's already had and seeing him front center is watching from a front row seat is going to be a real pleasure from the Board. Sorry, you asked, aren't you Travis. Is that it? That's it.

Operator, we've got nothing else on this and up by you?

Operator

There are no other questions in the queue.

Bill Hoffman -- President and Chief Executive Officer

All right. Thanks, everyone.

Mitch Hill -- Chief Financial Officer

Thank you so much.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Caroline Corner -- Investor Relations

Bill Hoffman -- President and Chief Executive Officer

Drew Hykes -- Chief Operating Officer

Mitch Hill -- Chief Financial Officer

Cecilia Furlong -- Morgan Stanley -- Analyst

Unknown speaker

Larry Biegelsen -- Wells Fargo Securities -- Analyst

Marie Thibault -- BTIG -- Analyst

William Plovanic -- Canaccord Genuity -- Analyst

Tom Tu -- Chief Medical Officer

Adam Maeder -- Piper Sandler -- Analyst

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