Inspire Medical Systems (NYSE:INSP) FY Conference December 02, 2025 11:30 AM ET Company ParticipantsAdam Maeder - Managing DirectorTim Herbert - Chairman and CEOEzgi Yagci - VP of Investor RelationsAdam MaederThrilled to have you. Maybe just to kick things off, wanted to touch on the implied Q4 guidance. You know, the Q3 print, nice bounce-back quarter. You beat the top line. You crushed EPS numbers. You did reaffirm the full-year guidance for 2025 on revenue, which implies a decent step up quarter over qua ...

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $224.5 million, a 10% increase from $203.2 million in Q3 2024 [15] - U.S. revenue was $214.4 million, up 9% from $195.8 million in the prior year [15] - Gross margin improved to 85.8% from 84.1% year-over-year, driven by increased sales volume and a favorable sales mix of Inspire 5 [15] - Operating income decreased to $9.6 million from $14.3 million in the prior year [16] - Net income for the quarter was $9.9 million, down from $18.5 million year-over-year [16] - Adjusted EBITDA was $44 million, slightly down from $44.5 million in the prior year [17] - The company increased its earnings per share guidance to $0.90-$1, up from $0.40-$0.50 previously [9] Business Line Data and Key Metrics Changes - Inspire 5's U.S. launch showed significant progress, with physician training over 98% complete and contracting over 90% complete for centers [8] - The Inspire 5 system demonstrated an 87% inspiratory overlap with patients' breathing, indicating strong clinical performance [5] - The company reported a 20% reduction in surgical times based on clinical studies [4] Market Data and Key Metrics Changes - Revenue outside the U.S. was $10.1 million, a 37% increase year-over-year [15] - The Centers for Medicare & Medicaid Services (CMS) finalized an 11% increase in the physician fee schedule for CPT code 64568, effective January 1, 2026 [10] Company Strategy and Development Direction - The company remains focused on patient outcomes and innovation, investing in clinical evidence and medical education [4] - Strategies include training advanced practice providers and increasing the capacity of provider partners to treat more patients [13] - The company is optimistic about the future, with plans to drive long-term stakeholder value [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of growth heading into 2026, with an early indication of 10%-11% growth for next year [22] - The company is mindful of near-term factors such as inventory transitions and competitive activity but remains focused on executing its growth strategy [23] - Management highlighted the positive impact of GLP-1s on patient flow into clinics, which could benefit Inspire therapy [12] Other Important Information - The company completed $50 million in share repurchases during the quarter, totaling $125 million year-to-date [17] - The company ended the quarter with $411 million in cash and investments, allowing for continued investment in growth strategies [17] Q&A Session Summary Question: Thoughts on 2026 planning and cadence - Management is focused on finishing Q4 strong and is still early in the 2026 planning process, indicating potential accelerated growth from Q3 [22] Question: Trends in business for October and Q4 guidance - Management noted strong trends with Inspire 5 and expects to see consistent execution and operational benefits from tighter integration across departments [28] Question: Transitioning centers to Inspire 5 - Management confirmed that while many centers are transitioning to Inspire 5, some will continue to use Inspire 4 for economic reasons [32] Question: Operating expenses and sustainability - Management indicated that while there is a focus on expense control, investments in R&D and marketing will continue, with a disciplined approach to spending [36] Question: Impact of new competitors on market growth - Management stated that it is early days for new competitors and they will continue to monitor the situation closely [64] Question: Economic considerations for centers using Inspire 4 - Management clarified that economic factors are more related to site of service reimbursement rather than physician reimbursement rates [82] Question: Operating expenses trend for 2026 - Management expects a slight increase in DTC spending but does not anticipate it to grow at the same rate as revenue [83]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $217.1 million, an 11% increase from $195.9 million in Q2 2024 [23] - U.S. revenue was $207.2 million, a 10% increase from $187.8 million in the prior year [23] - Gross margin decreased to 84% from 84.8% year over year, primarily due to a $2.1 million charge for excess INSPIRE IV subcomponents [23][24] - Operating loss for the quarter was $3.3 million compared to an operating income of $5.1 million in the prior year [25] - Net loss for the quarter was $3.6 million, representing a loss per share of $0.12 compared to net income of $0.32 per share in Q2 2024 [25][26] - Adjusted EBITDA for the quarter was $44.1 million, a 14% increase compared to $38.7 million in the prior year [26] Business Line Data and Key Metrics Changes - The majority of units sold in Q2 were INSPIRE IVs, leading to minimal inventory destocking [9] - The transition to INSPIRE V faced challenges, with many centers not completing necessary training and onboarding [6][7] - Over 50% of U.S. centers have completed the implementation of SleepSync, which is crucial for the transition to INSPIRE V [8] Market Data and Key Metrics Changes - Revenue outside the U.S. was $9.9 million, a 23% increase year over year [23] - The approval of CPT code 64568 for INSPIRE V for Medicare patients was announced in April, but billing could only begin on July 1, impacting the transition [10] Company Strategy and Development Direction - The company is focused on advancing the transition to INSPIRE V and has ramped up marketing and footprint expansion efforts in the second half of the year [11][12] - Investments in digital scheduling and community health talks are aimed at increasing patient awareness and building capacity [12] - The company aims to drive high-quality patient flow and increase provider capacity through training and certification of additional surgeons [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the commercial rollout of INSPIRE V but remains confident in the platform's potential [6][21] - The company adjusted its full-year revenue guidance to $900 million to $910 million, reflecting a 4% reduction at the midpoint from previous guidance [13] - Management expressed optimism about future growth, expecting revenue growth to exceed 12% to 13% in 2026 [38] Other Important Information - The company announced the retirement of Randy Bann, Executive Vice President, Patient Access and Therapy Awareness, effective January 2026 [19][20] - The national average Medicare hospital reimbursement for CPT code 64568 is proposed to increase to $32,000, a 4% increase from 2024 [16] Q&A Session Summary Question: Can you provide more detail on the revised guidance and the headwinds faced? - Management identified the completion of training and the ability to bill Medicare as the primary factors impacting guidance [33][34] Question: Will revenue in 2026 accelerate beyond the 12% to 13% growth expected for 2025? - Management indicated that they expect revenue growth to exceed the current guidance for 2025 due to ongoing investments [38] Question: Can you clarify the EPS guidance change? - The reduction in EPS guidance is primarily due to lower revenue expectations and increased direct-to-consumer spending [42] Question: What is the current uptake of Medicare billing since the software update? - Uptake has been limited as many sites were not fully operational until they could bill Medicare [87] Question: What is driving the 20% increase in patient implants for INSPIRE V? - The increase is attributed to reduced surgical complexity and improved capacity at centers that have transitioned to INSPIRE V [75]

Summary of Inspire Medical Systems (INSP) 2025 Conference Call Company Overview - **Company**: Inspire Medical Systems (INSP) - **Event**: 2025 Conference Call - **Date**: June 13, 2025 Key Points Industry and Market Dynamics - Discussion focused on the **Obstructive Sleep Apnea (OSA)** market and the competitive landscape surrounding it [2][10] - Emphasis on the **Inspire five** launch and its implications for the OSA treatment market [2][10] Inspire Five Launch - **Inspire five** features a **20% reduction in implant time** and improved sensing technology integrated into the neurostimulator [10][26] - The new device incorporates an **accelerometer** for respiration sensing, eliminating the need for a separate pressure sensing lead, thus simplifying the implant procedure [14][21] - The device allows for **Bluetooth communication** with a patient app and integrates with **SleepSync**, a cloud-based patient management system [11][12] Clinical Data and Performance - Clinical trials showed that **Inspire five** improved **inspiratory phase overlap** from **78% to 83%**, enhancing treatment effectiveness [22][24] - A study in Singapore indicated that the average nightly usage post-implant was **six hours**, demonstrating strong patient adherence [27] - The **St. Luke's Health** study reported over **80% success rate** in positional sleep apnea, indicating improved efficacy compared to previous trials [31][32] Surgeon Feedback and Adoption - Surgeons reported positive feedback regarding the ease of implantation without the pressure sensing lead, leading to reduced operating room (OR) time [41][42] - The transition to **Inspire five** is expected to increase the number of procedures performed by surgeons due to improved efficiency [64][70] Financial and Market Outlook - The company anticipates continued growth in adoption of Inspire therapy, with a focus on penetrating the **single-digit percentage** of the overall target market [38][39] - The **2025 guidance** includes expectations for increased capacity and productivity from surgeons, despite some anticipated competitive trials [82][83] Competitive Landscape - The emergence of **GLP-1 medications** for weight management in sleep apnea patients was discussed, with the potential for these treatments to complement Inspire therapy [98][104] - The company is monitoring the impact of GLP-1 on patient demand and treatment eligibility, noting that Inspire therapy remains effective for patients with tongue-based obstruction [100][103] Future Developments - Inspire is already working on **Inspire six**, which aims to enhance therapy adherence by detecting sleep states and automatically adjusting stimulation [90][91] - The integration of **SleepSync** with Inspire five is expected to facilitate better patient management and data collection for future improvements [92] Conclusion - Inspire Medical Systems is positioned for growth with the launch of Inspire five, leveraging advanced technology to improve patient outcomes and streamline surgical procedures. The company is optimistic about its market penetration and future innovations while navigating competitive pressures from emerging therapies.