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    Inspire Medical Systems (INSP)

    Q4 2024 Earnings Summary

    Reported on Feb 12, 2025 (After Market Close)
    Pre-Earnings Price$180.99Last close (Feb 10, 2025)
    Post-Earnings Price$170.49Open (Feb 11, 2025)
    Price Change
    $-10.50(-5.80%)
    • The full launch of the Inspire V device is expected to drive revenue growth and improve gross margins, with management anticipating sequential revenue improvement throughout the year and increasing gross margin guidance to 84%-86% due to the tailwind from Inspire V.
    • Management is committed to improving annual margins and profitability, aiming for a 30% operating margin in the long term, indicating significant margin expansion potential as they continue to invest in growth initiatives in a largely underpenetrated market.
    • The new Inspire V device reduces procedure times, increasing surgeon capacity and operating room efficiency, which is expected to drive higher adoption and revenue growth as surgeons can perform more Inspire cases.
    • The Department of Justice (DOJ) has initiated an investigation into Inspire Medical's marketing, promotion, and reimbursement practices. This investigation could lead to legal expenses, potential fines, and may negatively impact the company's reputation and financial performance.
    • Inspire Medical is no longer providing utilization growth guidance , which may indicate uncertainty about future growth rates and could signal a potential slowdown in the adoption of Inspire therapy.
    • The company's revenue growth guidance for 2025 is 17% to 19% , which is a deceleration from the 28% growth achieved in 2024 , suggesting that the company's growth momentum may be slowing down.
    MetricPeriodPrevious GuidanceCurrent GuidanceChange

    Revenue growth

    FY 2024

    27% to 28%

    no current guidance

    no current guidance

    Gross Margin

    FY 2024

    83% to 85%

    no current guidance

    no current guidance

    New U.S. Centers

    FY 2024

    52 to 56 new centers

    no current guidance

    no current guidance

    New U.S. Sales Territories

    FY 2024

    12 to 14 new territories

    no current guidance

    no current guidance

    Diluted Net Income Per Share

    FY 2024

    $1.20 to $1.40

    no current guidance

    no current guidance

    Diluted Shares Outstanding

    FY 2024

    30.6 to 30.7 million

    no current guidance

    no current guidance

    Revenue growth

    FY 2025

    no prior guidance

    17% to 19%

    no prior guidance

    Gross Margin

    FY 2025

    no prior guidance

    84% to 86%

    no prior guidance

    Diluted Net Income Per Share

    FY 2025

    no prior guidance

    $2.10 to $2.20

    no prior guidance

    Tax Rate

    FY 2025

    no prior guidance

    10%

    no prior guidance

    Diluted Shares Outstanding

    FY 2025

    no prior guidance

    31 million

    no prior guidance

    TopicPrevious MentionsCurrent PeriodTrend

    Inspire V device launch & procedure simplification

    Q3: Soft launch timelines, elimination of sensing lead. Q2: FDA approval, simpler OR procedures. Q1: On track for 2024 soft launch, 2025 full launch.

    Q4: Phased commercial launch with inventory ramp; cost benefits and reduced surgical complexity.

    Continues strong momentum, expected to have a major positive impact

    Margin expansion & profitability targets

    Q3: Profitability focus, reported 84.1% gross margin and EPS of $0.60. Q2: 84.8% gross margin, raised full-year EPS guidance. Q1: 84.9% gross margin, projected full-year profitability, $0.10–$0.20 EPS.

    Q4: 2025 gross margin of 84–86%, low single-digit op margin, $2.10–$2.20 EPS guidance.

    Ongoing improvement, balancing profitability with key investments

    Utilization growth trends & guidance changes

    Q3: Utilization flat Q2–Q3, raised rev guidance to $793–$798M. Q2: Revenue guidance up to $788–$798M, focused on same-store growth. Q1: Increased rev guidance to $783–$793M; emphasizing top-line and profitability.

    Q4: Dropped specific utilization guidance; focusing on center footprint expansion.

    Less granular guidance, but sustained growth plans

    Payor policy updates & coverage expansion

    Q3: PREDICTOR study data used to remove DISE requirement; BMI/AHI expansions. Q2: Some payors dropped DICE requirement, improved UH policy clarifications. Q1: High AHI, BMI coverage progress, pediatric expansions, UH alignment.

    Q4: Transition to cranial nerve code, collaborating with payers on coverage; addressing DISE reintroduction by UHC.

    Continued positive evolution, greater patient access expected

    International market expansion (France, U.K.)

    Q3: Countrywide reimbursement in France and U.K. growth, OUS revenue +27%. Q2: France reimbursement approved, strong EU adoption. Q1: No direct France/U.K. mention; overall strong EU growth.

    Q4: Reinforced France reimbursement; OUS remains 3–4% of total revenue; no U.K. details.

    Ongoing France progress, limited new U.K. commentary

    Department of Justice (DOJ) investigation

    Q3: No mention. Q2: No mention. Q1: No mention.

    Q4: Received civil investigative demand in Jan. 2025; company cooperating, confident in compliance.

    Newly emerged issue with uncertain impact

    Reduced transparency on operating metrics

    Q3: Will guide on revenue, GM, EPS; no longer guiding on certain metrics. Q2: No mention. Q1: Will stop reporting center/utilization metrics in 2025 to emphasize profitability.

    Q4: Discontinuing certain metrics; will still provide territories & field rep counts.

    Ongoing shift away from detailed operating data

    Deceleration in revenue growth guidance

    Q3: Raised full-year revenue guidance to 27–28% growth; no explicit “deceleration” term. Q2: Revenue guidance lifted to $788–$798M, no slowdown noted. Q1: $783–$793M guidance, no deceleration mentioned.

    Q4: 2025 revenue growth of 17–19% vs. 25% in Q4 2024, attributed to larger revenue base.

    Solid growth but moderating year-over-year pace

    Operating expense investments (R&D, marketing)

    Q3: R&D at 13% of revenue; lower DTC costs; OpEx up 10% yoy. Q2: R&D 15%, DTC at 12% of revenue, driving cost efficiencies. Q1: R&D in high teens, DTC spend flat at $100M, OpEx +21% yoy.

    Q4: R&D in mid-teens, DTC $94M for 2025, total OpEx up 11% yoy.

    Steady allocation to innovation and marketing with cost discipline

    Potential competition from other therapies (no longer mentioned)

    Q3: Monitoring 2025 competitor products; views GLP-1 as complementary. Q2: No mention. Q1: GLP-1 considered additive for obese patients; no serious competitive threat.

    Q4: Competition remains quiet; minimal concern about competitor approvals.

    Ongoing minimal impact from alternatives

    Deactivation of centers (no longer mentioned)

    Q3: Centers closed if surgeon relocates or inactive; reactivation possible. Q2: 12 deactivated, 1 reactivated; focusing on productive centers. Q1: Shift away from center counts; profitability focus.

    Q4: Will not report on centers; ending metric in 2025.

    Phasing out reporting, minimal new details

    Hurricanes & IV saline shortages (Q3-specific)

    Q3: Anticipated revenue headwind in Q4; evacuations, IV fluid crunch. Q2: No mention. Q1: No mention.

    Q4: Not discussed.

    Previously addressed challenge, no new updates

    1. Earnings Guidance and Profitability
      Q: Should we assume linear profitability path in 2025?
      A: Management expects to improve annual operating margin year-over-year. Due to revenue seasonality, they do not anticipate profitability in the first quarter but expect sequential improvement thereafter . Revenue growth is expected to outpace operating expense growth, leading to low single-digit operating income margin. They remain committed to investing in long-term growth, including R&D and expansion.

    2. DOJ Investigation
      Q: What's the status of the DOJ investigation?
      A: The company received a Civil Investigative Demand from the DOJ on January 17 . It is in very early stages, and they cannot provide details at this time . Management is committed to cooperating fully, conducting business ethically, and does not anticipate the investigation will interfere with operations .

    3. Inspire V Launch Impact
      Q: How will the Inspire V launch affect revenue and margins?
      A: The Inspire V launch will progress from a limited release to full launch during the year. Management anticipates sequential revenue growth after first-quarter seasonality . They increased gross margin guidance to 84%–86% due to a tailwind from Inspire V . The full financial impact of Inspire V is expected to be more pronounced in 2026.

    4. Inventory and Production Ramp
      Q: What's the status of Inspire V inventory build?
      A: A new production line for Inspire V is active and scaling up. Units have been implanted in Singapore and the U.S.. Management is carefully ramping the limited launch to avoid start-stop issues and will initiate full launch once sufficient inventory is available.

    5. GLP-1 Medications Impact
      Q: How do GLP-1 medications affect Inspire?
      A: Management hasn't seen a tailwind yet from GLP-1s but believes it is coming. These medications can help patients lose weight and qualify for Inspire. They are working with sites to measure the impact and will continue to monitor.

    6. Reimbursement and CPT Code Transition
      Q: How will the transition to the cranial nerve stimulation code affect reimbursement?
      A: By eliminating the pressure sensor with Inspire V, they are transitioning back to CPT code 64568. They are updating policies with payers and CMS to include both codes. There may be a period where centers use both Inspire IV and V, requiring both codes.

    7. UnitedHealthcare Coverage Changes
      Q: What are your thoughts on UnitedHealthcare's coverage changes requiring DISE?
      A: Management is engaging with UnitedHealthcare to address recent policy changes. They believe more communication is needed to clarify that physicians should have flexibility in diagnosing patients without mandating DISE. They will continue discussions to ensure appropriate patient qualification methods are supported.

    8. Competition Assumptions
      Q: What are you assuming in guidance regarding competition?
      A: Competition has been quiet, and management has no specific information. If competitors receive approval, they expect some activity at academic centers and have included this in their guidance.

    9. Center Growth and Utilization
      Q: What's your plan for center growth and utilization?
      A: They plan to continue expanding centers and territories in line with historical trends . Growth is expected from increased utilization at existing centers and focus on national contracts and ASCs . They are no longer providing specific utilization metrics but will provide updates on sales reps and field clinical reps.

    10. Guidance Philosophy
      Q: Can you explain your guidance philosophy?
      A: Management builds a detailed plan considering tailwinds and challenges. Growth is expected from increased work at existing centers, and investments in growth initiatives like DTC and R&D will continue. The phased launch of Inspire V is factored into guidance.

    Research analysts covering Inspire Medical Systems.