Inspire(INSP) - 2022 Q4 - Annual Report

Financial Performance - Revenue for the fiscal year ended December 31, 2022, was $407.9 million, a 74.8% increase from $233.4 million in 2021, with a gross margin of 83.8%[30] - The net loss for the fiscal year 2022 was $44.9 million, compared to a net loss of $42.0 million in 2021[30] - The accumulated deficit as of December 31, 2022, was $324.3 million[30] - Stockholders' equity grew to $496.0 million in 2022, up from $229.0 million in 2021, indicating a substantial increase of approximately 116.7%[480] - The company reported an accumulated deficit of $324.3 million in 2022, compared to $279.4 million in 2021, which is an increase of about 16.0%[480] - Total current assets increased to $530.0 million in 2022 from $268.5 million in 2021, representing a growth of about 97.5%[480] - Cash and cash equivalents rose significantly to $441.6 million in 2022, compared to $214.5 million in 2021, marking an increase of approximately 106.5%[480] - Accounts receivable increased to $61.2 million in 2022 from $34.2 million in 2021, reflecting an increase of about 79.0%[480] - Total liabilities rose slightly to $68.9 million in 2022 from $66.0 million in 2021, showing a marginal increase of about 4.4%[480] - The company’s total assets increased to $564.9 million in 2022 from $295.1 million in 2021, representing a growth of approximately 91.2%[480] Product and Technology - The Inspire system has been implanted in over 36,000 patients across more than 1,000 medical centers in the U.S., Europe, and Asia[19] - Inspire therapy received FDA premarket approval in 2014 and is the first and only FDA-approved neurostimulation technology for moderate to severe obstructive sleep apnea (OSA)[19] - The Inspire system received FDA approval for full-body MRI scans in 2022, expanding its use labeling from head, neck, and extremity scans[33] - The Inspire system received Breakthrough Device Designation from the FDA in July 2022, allowing for an increase in the upper limit of AHI to 100 events per hour[36] - The Inspire IV neurostimulator, launched in 2017, is 40% smaller than its predecessor and maintains approximately 11 years of battery life[92] - The newly designed respiratory sensing lead, approved by the FDA in 2019, has a 49% reduction in diameter compared to the previous design, simplifying surgical placement[93] - The Inspire system's battery is designed to last approximately 11 years without charging or maintenance[51] Clinical Outcomes - The Inspire therapy demonstrated a 70% reduction in the median apnea-hypopnea index (AHI) from a baseline of 29.3 events per hour to 9.0 events per hour at 12 months[25] - The STAR trial demonstrated a 70% reduction in median AHI from 29.3 events per hour to 9.0 events per hour at 12 months post-treatment, with a median AHI of 6.2 events per hour at five years[51] - Patients used Inspire therapy an average of 5.7 hours per night 12 months after initial treatment, with an overall patient satisfaction rate of 90%[51] - Inspire therapy has shown a strong safety profile and high patient satisfaction, with 90% satisfaction reported in patients followed for an average of 12 months[28] - Inspire therapy demonstrated a significant reduction in AHI from a baseline of 33.0 to 10.2 events per hour, and ESS scores improved from 11 to 6, indicating enhanced patient outcomes[62] - The ADHERE patient registry reported an average usage of Inspire therapy at 5.7 hours per night, with 90% overall patient satisfaction and 91% preferring Inspire over CPAP[62] - Inspire therapy showed a therapy compliance rate of 86% daily and 93% for 5+ days weekly, indicating strong adherence among patients[61] Market and Sales Strategy - The company plans to expand its sales and marketing organization to facilitate adoption of Inspire therapy in existing and new markets in the U.S. and Europe[35] - The company aims to penetrate new international markets, including Australia, Hong Kong, South Korea, and China, based on market size and reimbursement prospects[36] - Inspire therapy is marketed through a direct sales force and exclusive distribution partners in international markets, focusing on physician and patient awareness[52] - The company has established 225 sales territories in the U.S. and 12 in Europe, focusing on expanding market presence and physician engagement[75] - The Inspire Sleep app has been downloaded over 60,000 times, enhancing patient engagement and data collection capabilities[78] - The Inspire SleepSync™ patient management system has recorded over 3.7 million patient nights, demonstrating effective real-world outcomes[68] Regulatory and Compliance - The Inspire products are classified as Class III devices, which have received PMA, requiring extensive data to demonstrate safety and effectiveness[120] - The FDA may approve a PMA with post-approval conditions to ensure device safety and effectiveness, which may include long-term follow-up data collection from patients[122] - Changes to an approved device that affect safety or effectiveness require submission of a PMA supplement, which may not require extensive clinical data[123] - Clinical studies are almost always required to support a PMA, and must comply with FDA's investigational device exemption regulations[124] - The Breakthrough Devices Program aims to expedite the development and review of devices that provide effective treatment for life-threatening conditions[129] - Post-market regulations include stringent quality system requirements and compliance with FDA's medical device reporting regulations[131] - The EU Medical Devices Regulation requires manufacturers to register devices and assign unique identifiers for better traceability[145] - Manufacturers must comply with the EU medical device vigilance system, reporting serious incidents and corrective actions to relevant authorities[146] - The FDA has broad regulatory compliance powers, including the ability to impose sanctions for non-compliance[134] - Failure to obtain timely regulatory approval in foreign markets could prevent product marketing and lead to sanctions[136] - The Medicines and Healthcare Products Regulatory Agency (MHRA) has become the regulatory authority for the medical device market in Great Britain since January 1, 2021, requiring registration of devices before market placement[148] - New UK Medical Devices Regulations, originally set to take effect in July 2023, have been postponed to July 2024, allowing devices certified under EU regulations to be marketed in Great Britain under CE marks for a transitional period[149] Workforce and Corporate Governance - As of December 31, 2022, the company had 755 employees, a 56% increase during 2022 to support rapid business growth[177] - The company maintains a global attrition rate of less than 11% despite aggressive headcount growth[182] - As of December 31, 2022, 46% of the workforce was female, and 14% identified as a member of a minority racial group[189] - The company published its inaugural ESG Report in December 2022 and plans to report progress annually[191] - The company has implemented a 401(k)-employer match for all U.S.-based employees starting in 2022[180] - The company has maintained its auditor, Ernst & Young LLP, since 2015, ensuring consistency in financial reporting[477] Economic and Market Conditions - The company experienced seasonality, with higher sales in the fourth quarter due to patients having paid their annual insurance deductibles in full[175] - A hypothetical 1% change in interest rates during 2022 would have impacted interest and dividend income by approximately $2.4 million[464] - The company aims to preserve capital while maximizing income from investments without significantly increasing risk[466] - The company does not currently use or plan to use financial derivatives in its investment portfolio[464] - No single customer represented more than 10% of accounts receivable as of December 31, 2022[467] - The implementation of the Affordable Care Act (ACA) has significantly affected medical device manufacturers by changing healthcare financing and delivery[168] - Future healthcare reform measures may limit government payments for healthcare products and services, potentially reducing demand for the company's products[172]