Inspire Medical Systems (INSP) Wells Fargo 21st Annual Healthcare Conference summary

Business and Technology Updates

• Over 140,000 patients treated since 2014 approval, with Inspire V system launched last year showing strong outcomes and improved surgical workflow due to integrated sensors.

• Inspire V synchronizes stimulation with respiration using an accelerometer, achieving 87% synchronization in clinical studies and focusing on reducing hypoxic burden, which is linked to cardiovascular health.

• Inspire VI, in development, will add sleep detection for automatic activation, aiming to improve therapy adherence; FDA submission targeted for 2027 and potential launch in 2028.

• Digital initiatives like SleepSync streamline prior authorizations and patient engagement, with a new patient app forthcoming.

• Inspire remains the only closed-loop system in the market, with low revision rates and strong physician confidence despite new competitors.

Financial Performance and Guidance

• Q2 2026 revenue reached $200.6M, down 7.6% year-over-year due to coding and reimbursement disruption, but results exceeded expectations and gross margin expanded to 85.5% driven by Inspire V mix.

• Sequential revenue improvement expected in Q3 and Q4, with Q2 marked as the low point for the year; Q4 typically sees the largest seasonal step-up.

• Raised full-year 2026 guidance for revenue, adjusted operating margin, and adjusted EPS following strong Q2 performance.

• Operating cash flow for Q2 was $23.2M, with adjusted diluted EPS at $0.14.

• Gross margins remain in the mid-80% range, with disciplined spending and focus on high-ROI activities to drive future operating margin improvement.

Coding, Reimbursement, and Regulatory Outlook

• Improved coding clarity for Inspire V in 2026, with C-codes in place and reduced uncertainty; most centers now confident in billing and reimbursement processes.

• CMS has proposed 12%-15% increases in facility rates for hospitals and ASCs, with final rules expected in November and effective January 2027.

• Long-term solution is a new Category 1 CPT code under review at the AMA, with a decision expected in weeks and implementation in January 2028.

• Only two MACs have surgeon fee impact with -52 modifier; continued focus on customer education.

• Project Horizon identified $30 million in efficiencies to reinvest in growth initiatives, including expanding patient access and supporting innovation.