Inspire Medical Systems, Inc. (INSP) Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 exceeded Street expectations: revenue $201.3M vs $194.9M consensus* and diluted EPS $0.10 vs -$0.23 consensus*, on 23% YoY growth and 84.7% gross margin; management reiterated FY revenue ($940–$955M) and raised EPS to $2.20–$2.30, citing Inspire V full launch and operating leverage .
• Q2 flagged as a “transition quarter” as centers amend contracts, adopt the new programmer, and work down Inspire IV inventory; sequential revenue growth guided to mid- to high-single digits and profitable, but below current EPS consensus, with stronger 2H and especially Q4 anticipated .
• Coverage and reimbursement for Inspire V progressing: CPT 64568 now incorporated into policies covering ~80% of >300M covered lives (commercial, Medicare, VA), with ASC reimbursement uplift; management views physician economics as time-adjusted neutral-to-positive given shorter OR times .
• Cash/investments of $414M (down from $516.5M at YE) reflect $75M ASR and inventory build to support Inspire V; tariff exposure de minimis; tax rate ~10% and diluted shares ~31M guide maintained .
• Stock narrative catalysts: Inspire V U.S. full launch execution (capacity gains, surgeon uptake), 2H utilization trajectory, and FY guidance durability vs Street estimates (Street FY EPS and revenue materially below guide, implying potential upward revisions)* .

Note: Asterisked values are from S&P Global consensus.

What Went Well and What Went Wrong

• What Went Well

  • Demand and execution: revenue +23% YoY to $201.3M with 84.7% gross margin and a swing to diluted EPS $0.10 (vs -$0.34 YoY); Adjusted EBITDA rose to $33.2M (16% margin), evidencing operating leverage .
  • Product cycle: “We are now ready to launch the Inspire V system and look forward to initiating the full launch this month in the U.S.”; management highlighted strong surgeon reception and shorter procedures reducing constraints .
  • Guidance quality: FY revenue reiterated ($940–$955M) and FY EPS raised to $2.20–$2.30, supported by expected 2H ramp as V adoption expands .

• What Went Wrong

  • Q2 air pocket: Management warned of a transition quarter driven by contract amendments, programmer roll-out, Inspire IV inventory burn-down, and some patient warehousing ahead of V; Q2 EPS expected below consensus despite sequential revenue growth .
  • International softness: OUS revenue fell 6% YoY to $7.7M in Q1 as 2024 Q1 had benefited from post-EU MDR approval catch-up; FX neutral in Q1 but some FX headwinds expected in Q2 .
  • Balance sheet draw: Cash/investments declined to $414M, reflecting a $75M ASR and inventory build to support V full launch (prudent, but reduces optionality near-term) .

Financial Results

Core P&L and Non-GAAP (oldest → newest)

Geography (Revenue, $M) (oldest → newest)

KPIs and Operating Metrics (current quarter unless noted)

Results vs. S&P Global Consensus (Q1 2025)

Values marked with * are retrieved from S&P Global.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We are now ready to launch the Inspire V system and look forward to initiating the full launch this month in the U.S.” — Tim Herbert, CEO .
• “We expect the second quarter will be a transition quarter... and for revenue to grow mid- to high single digits sequentially... We expect a strong second half of 2025.” — Tim Herbert .
• “CPT code 64568... has been incorporated into policies covering approximately 80% of our over 300 million covered lives... including commercial payers, Medicare and the VA system.” — Tim Herbert .
• “We ended the quarter with $414 million in cash and investment balances. The reduction... is attributed to $75 million of share repurchases and... building Inspire V inventory balances.” — Rick Buchholz, CFO .
• “We now expect diluted net income for the full year 2025 will be $2.20 to $2.30 per share, an increase from our previous range of $2.10 to $2.20 per share.” — Rick Buchholz .

Q&A Highlights

• Q2 transition and warehousing: Management cited patients waiting for Inspire V and center-level contract/programmer changes; expects mid- to high-single-digit sequential revenue growth in Q2 and to “make up” in 2H (especially Q4) .
• Physician economics under CPT 64568: Surgeons value shorter procedures and elimination of sensing lead; ASC reimbursement improves; overall physician economics expected to be acceptable on a time-adjusted basis .
• Capacity expansion: Inspire V’s shorter procedure, additional ENTs, and SleepSync-enabled workflow expected to raise throughput; focus on stacking “Inspire days” in ORs .
• Margins: FY gross margin 84%–86% reiterated; Inspire V mix accretive to GM; inventory levels elevated to support launch .
• OUS/FX: OUS -6% YoY in Q1 (easy comp in 2024 Q1 cited last year); no FX in Q1, some FX emerging in Q2 .

Estimates Context

• Q1 2025 results vs consensus: Revenue $201.3M beat $194.9M*; diluted EPS $0.10 beat -$0.23* (material upside to both lines) .
• FY 2025 context: Company guide $940–$955M revenue and $2.20–$2.30 EPS vs Street at ~$905M revenue* and ~$1.51 EPS*; this gap implies potential upward estimate revisions if V launch and 2H utilization unfold as guided .
• Near-term caveat: Management guided Q2 EPS profitable but below current consensus, with sequential EPS growth thereafter .

Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

• Q1 print demonstrates durable demand and operating leverage; magnitude of EPS beat vs negative consensus de-risks near-term profitability narrative .
• Expect a “setup” quarter in Q2 (inventory, contracts, programmer, patient warehousing) followed by a utilization-led 2H reacceleration as Inspire V scales; Q4 likely the high-water mark .
• Inspire V is the core catalyst: simpler procedure, physician-friendly workflow, and ASC economics should expand capacity and implanter base, supporting same-store sales and surgeon adds .
• Guidance credibility strengthened by reiterating revenue and raising EPS; Street FY revenue/EPS sit below guide, positioning for potential positive revisions if execution remains on track* .
• Watch items: execution of V rollout (training, restocking cadence), OUS momentum (France/UK), FX in Q2, and any developments on the DOJ CID disclosed in Q4 .
• Liquidity remains solid (>$400M), despite ASR and inventory build; tax ~10% and diluted shares ~31M guide provide further EPS visibility .
• Tactical: Expect near-term volatility around Q2 commentary and warehousing dynamics; strategically, V-driven capacity unlock and 2H cadence are the medium-term thesis.

Appendix: Source Documents

• Q1 2025 earnings press release and financials .
• Form 8-K including Exhibit 99.1 (press release) and investor materials .
• Q1 2025 earnings call transcript –; alternative transcript –.
• Q4 2024 press release and call for prior quarter comparisons – –.
• Q3 2024 8-K and press release for YoY/trend context –.

Values marked with * are retrieved from S&P Global.