Here’s What Happened to Inspire Medical (INSP) in Q3

Core Insights - Headwaters Capital Management's third-quarter 2025 investor letter primarily focused on the performance of AI-related investments and highlighted the challenges faced by Inspire Medical Systems, Inc. [1] Company Performance - Inspire Medical Systems, Inc. (NYSE:INSP) experienced a one-month return of -3.86% and a significant decline of 60.95% over the past 52 weeks, closing at $77.68 per share with a market capitalization of $2.297 billion on October 13, 2025 [2] - The company reported revenue of $217.1 million for Q2 2025, marking an 11% increase from Q2 2024 [4] Investment Challenges - Inspire Medical Systems, Inc. was identified as the top detractor in the portfolio, with a decline of 43% attributed to mismanagement in the rollout of their next-generation sleep apnea device, issues with insurance coverage, inventory management, and competition concerns [3] - Despite these challenges, revenue growth is projected to be in the +8-10% range for the second half of 2025, with an optimistic outlook of approximately +10% growth for 2026 [3] Market Position - Inspire Medical Systems, Inc. is not among the 30 most popular stocks among hedge funds, with 34 hedge fund portfolios holding the stock at the end of Q2 2025, down from 37 in the previous quarter [4] - The company is viewed as having a quality med tech asset in a large global market, trading at only 2x 2025 revenue, with 33% of its market cap in cash and generating free cash flow [3]