INSP Q2 2025 Cuts EPS Guide to $0.40–$0.50 Amid Inspire V Delays
- Improved Implant Efficiency: Limited market release centers reported a 20+% increase in patient implants with Inspire V, driven by a simplified procedure (eliminating the pressure sensing lead) and reduced operating room time, which could enhance overall volume as more centers transition.
- Resolution of Key Headwinds: The completion of essential steps—such as SleepSync implementation at over 50% of centers and the Medicare billing process for code 64568 now being fully operational—provides confidence that current short‐term challenges will be resolved, setting the stage for robust volume growth.
- Strategic Investments for Future Growth: The ramp-up in direct-to-consumer marketing and footprint expansion, combined with management’s guidance for potential acceleration beyond the current 12–13% growth rate in 2026, makes a compelling bullish case for sustainable long-term revenue growth.
- Delayed Inspire V Transition: Centers are facing challenges with completing training, contracting, and the implementation of SleepSync, delaying the full rollout of Inspire V. This delay forces many centers to continue using Inspire IV, which could depress revenue growth in the near term.
- Medicare Billing and Reimbursement Risks: The delay in implementing billing for the new CPT code (64568) until July has resulted in centers deferring Inspire V implants in favor of Inspire IV. This could potentially undermine expected reimbursement improvements and continue to weigh on revenue expansion.
- Profitability and Expense Concerns: The guidance revision shows a substantial drop in EPS (from a prior range of $2.2–$2.3 to a GAAP guide of $0.40–$0.50), driven by increased operating expenses—including higher marketing, footprint expansion costs, and one-time charges related to stock-based compensation—raising concerns about near-term profitability.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | FY 2025 | $940 million to $955 million | $900 to $910 | lowered |
EPS | FY 2025 | $2.20 to $2.30 per share | $0.40 to $0.50 per share | lowered |
Gross Margin | FY 2025 | 84% to 86% | 84% to 86% | no change |
Q3 2025 Revenue Growth | Q3 2025 | no prior guidance | 1% to 3% sequentially | no prior guidance |
One-Time Charge | FY 2025 | no prior guidance | $0.57 | no prior guidance |
Accounts Receivable Balance | FY 2025 | no prior guidance | Increased | no prior guidance |
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Revised Guidance
Q: What headwinds drove lowered revenue guidance?
A: Management explained the delays in Inspire five transition, training and Medicare billing issues along with lingering Inspire IV inventory pressured revenue, prompting a more cautious outlook. -
2026 Outlook
Q: Will 2026 revenue grow faster than 2025?
A: They expect corrective actions to boost patient flow and push growth beyond the current 12–13% range in 2026. -
EPS Clarity
Q: How is the EPS guidance adjusted this quarter?
A: The GAAP EPS guidance fell to $0.40–$0.50, reflecting a $0.57 one-time charge and higher operating costs. -
Volume Trends
Q: What caused the lower Inspire five volumes this quarter?
A: Delays in center onboarding and SleepSync implementation lowered volumes, though early sites achieved a 20% implant increase. -
Medicare Uptake
Q: How is Medicare billing uptake progressing post-July update?
A: With the new CPT code 64568 now in force, the uptake is emerging, setting a foundation for improved billing in coming quarters. -
Inventory Impact
Q: How did Inspire IV inventory affect margins?
A: The gradual burn-down of Inspire IV inventory added pressure, slowing revenue and contributing to lower margins this quarter. -
Marketing Spend
Q: What’s driving increased operating expenses this quarter?
A: Enhanced DTC and footprint investments to raise patient awareness have boosted costs as part of a long-term growth strategy. -
SleepSync Implementation
Q: Is SleepSync fully implemented across centers?
A: Over 50% of centers have implemented SleepSync, marking progress toward a streamlined patient management system for longer‑term benefits. -
GLP‑1 Impact
Q: How temporary is the GLP‑1 impact on volumes?
A: Management believes the GLP‑1 trial impact is short‑lived, with patient weight loss initiatives offsetting its effect. -
Product Mix
Q: Will Inspire IV still be sold in 2026?
A: Yes, Inspire IV remains available in select markets, though the primary focus in the US is shifting to Inspire five. -
Seasonal Trends
Q: Why is Q3 expected to be softer than Q4?
A: Q3 growth of 1–3% sequentially reflects early transition delays, with a traditional, stronger Q4 ramp-up due to seasonality. -
DICE Testing
Q: How are DICE test numbers being monitored?
A: They continue tracking DICE test volumes and scheduling to ensure smooth patient qualification once centers complete full onboarding. -
Accounts Receivable
Q: Why did accounts receivable increase this quarter?
A: A temporary delay from switching to an automated billing system in May caused a spike that is expected to normalize by Q3. -
Reimbursement Feedback
Q: Are surgeons concerned about lower Medicare reimbursement?
A: Initial concerns are being alleviated by the new CPT code and upcoming OPPS rate improvements enhancing overall reimbursement. -
EPS Drivers
Q: What are the main factors behind EPS decline?
A: The EPS drop is primarily due to lower revenue guidance and increased expenses, including one-time stock adjustments, impacting overall profitability. -
Inventory Destocking
Q: What is the quantified impact of inventory destocking?
A: Management did not quantify the net inventory headwind, citing timing variability in center transitions as a key factor. -
Center Activation
Q: How many US centers are actively implanting?
A: As of June 30, there are slightly over 1,500 active centers, reflecting moderated expansion during the Inspire five transition.
Research analysts covering Inspire Medical Systems.