INSP

It has been about a month since the last earnings report for Inspire Medical Systems (INSP). Shares have lost about 4.1% in that time frame, underperforming the S&P 500. But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Inspire due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts. Inspire Medical Q2 Earnings Beat Estimates, ’26 View Raised Inspire Medical Systems, Inc. reported second-quarter 2026 adjusted earnings per share of 14 cents, down 58.8% year over year. The figure beat the Zacks Consensus Estimate of a loss of 22 cents by 163.6%. GAAP earnings per share in the quarter were 1 cent compared to GAAP loss per share of 12 cents in the year-ago quarter. INSP’s Q2 Revenues in Detail Inspire Medical registered revenues of $200.6 million in the second quarter, down 7.6% year over year. The figure beat the Zacks Consensus Estimate by 2.9%. The decline in sales was primarily caused by a decrease in U.S. revenues due to coding and reimbursement challenges. This was partly offset by an increase in international revenues. As of June 30, 2026, INSP operated 280 U.S. sales territories and employed 301 field clinical representatives compared with 295 territories and 275 representatives at the end of 2025. INSP’s Q2 Revenue Mix Reflects U.S. Pressure In the second quarter, U.S. revenues totaled $187.3 million, down 9.6% year over year. Management attributed the weakness primarily to the evolving coding and reimbursement environment, which slowed prior-authorization activity and procedure volumes. International revenues totaled $13.3 million, up 33.6% year over year. The overseas gain partly offset the domestic decline, but the United States remained the dominant contributor to quarterly sales. INSP’s Margin Analysis In the second quarter, Inspire Medical’s gross profit decreased 6% year over year to $171.5 million. The gross margin expanded 150 basis points to 85.5%, primarily driven by a higher sales mix of the Inspire V system. Selling, general and administrative expenses decreased 7.7% year over year to $147.3 million. Research and development expenses declined 5.8% to $24.7 million. Operating expenses of $171.9 million decreased 7.4% year over year. Adjusted operating profit decreased 66.8% year over year to $3.2 million. The adjusted operating margin contracted 280 basis points to 1.6%. Inspire Medical’s Financial Position Inspire Medical exited the second quarter of 2026 with cash and cash equivalents and short-term investments of $320.7 million compared with $283.8 million at the end of first-quarter 2026. Cumulative net cash provided by operating activities at the end of second-quarter 2026 was $36.1 million, compared with the cumulative net cash used in operating activities of $4 million a year ago. Inspire Medical Raises 2026 Outlook Inspire Medical has updated its revenue and earnings per share outlook for 2026. The company raised its revenue guidance to $835 million-$875 million from the previously projected $825 million-$875 million. The Zacks Consensus Estimate is pegged at $851.2 million. INSP now expects adjusted earnings per share for 2026 in the range of $1.05-$1.45, up from the prior guidance of $0.75-$1.25. The company projects an adjusted operating margin of 4-6%. The Zacks Consensus Estimate is pegged at $1.24 per share. Since the earnings release, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -49.19% due to these changes. At this time, Inspire has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy. Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Inspire has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months. Inspire belongs to the Zacks Medical Info Systems industry. Another stock from the same industry, Tempus AI (TEM), has gained 32.4% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026. Tempus reported revenues of $382.49 million in the last reported quarter, representing a year-over-year change of +21.6%. EPS of -$0.04 for the same period compares with -$0.22 a year ago. Tempus is expected to post a loss of $0.07 per share for the current quarter, representing a year-over-year change of +36.4%. Over the last 30 days, the Zacks Consensus Estimate has changed +3.3%. The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Tempus. Also, the stock has a VGM Score of F. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Inspire Medical Systems, Inc. (INSP) : Free Stock Analysis Report Tempus AI, Inc. (TEM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Inspire Medical Systems’ second quarter results were marked by improved coding clarity and cost discipline, which management credited as key drivers behind the company’s outperformance versus Wall Street expectations. Despite a year-on-year revenue decline, CEO Tim Herbert pointed to effective navigation of the evolving reimbursement landscape as a critical factor, stating the company delivered “adjusted operating income and positive cash flow ahead of expectations through continued disciplined cost management.” The quarter also benefited from increased adoption of the new Inspire V system and targeted support for high-volume centers, as Inspire worked to stabilize operations and address the temporary disruption caused by earlier coding changes. Is now the time to buy INSP? Find out in our full research report (it’s free). Revenue: $200.6 million vs analyst estimates of $194.7 million (7.6% year-on-year decline, 3% beat) Adjusted EPS: $0.14 vs analyst estimates of -$0.25 (significant beat) Adjusted EBITDA: $38.9 million vs analyst estimates of $27.68 million (19.4% margin, 40.5% beat) The company slightly lifted its revenue guidance for the full year to $855 million at the midpoint from $850 million Management raised its full-year Adjusted EPS guidance to $1.25 at the midpoint, a 25% increase Operating Margin: -0.3%, up from -1.5% in the same quarter last year Market Capitalization: $1.74 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Jonathan Block (Stifel) asked about the impact of physician fee reductions in two MAC regions and the pace of coding education. CEO Tim Herbert explained that education efforts are minimizing reductions and that the company is working through its highest-volume centers, expecting most to be up to speed in the third quarter. Adam Maeder (Piper Sandler) requested more detail on Project Horizon’s growth investments and timing. Herbert responded that most initiatives target patient flow and will have a more substantial impact in 2027, with some benefits possible by late 2026. Anthony Petrone (Mizuho Americas) inquired about the backlog of procedures and the future of the WISeR program. Herbert confirmed that procedure volumes are recovering as coding comfort improves and that the company is prepared for potential changes to WISeR, with C-codes now incorporated. Richard Newitter (Truist Securities) asked about GLP-1 drugs’ impact and whether Project Horizon capacity would help expand the physician base. Herbert said GLP-1s have not materially affected Inspire demand and that new investments will support both center and physician expansion. Daniel Markowitz (Evercore ISI) questioned the effectiveness of center education programs and international growth drivers. Herbert shared that volumes rebound as centers gain billing confidence and highlighted Continental Europe, especially France, for recent international strength. Looking ahead, our team will be monitoring (1) the pace at which U.S. centers adapt to the new coding environment and resume pre-disruption procedure volumes, (2) the execution and measurable impact of Project Horizon’s investments in patient flow and digital engagement, and (3) further international growth, particularly in European markets with recent reimbursement wins. Additionally, clarity on CMS reimbursement rates and adoption of new clinical evidence into practice will be key indicators for Inspire’s trajectory. Inspire Medical Systems currently trades at $60.51, up from $52.22 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members). ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time. Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Monday, Aug. 3, 2026 at 5:00 p.m. ET Vice President of Investor Relations - Ezgi Yagci Chairman and Chief Executive Officer - Tim Herbert Chief Financial Officer - Matt Osberg Operator: Good afternoon. My name is Dilem, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Inspire Medical Systems Second Quarter 2026 Conference Call. [Operator Instructions] I'll now hand the call over to your first speaker, Ezgi Yagci, the Vice President of Investor Relations at Inspire. You may begin the conference. Ezgi Yagci: Thank you, Dilem, and thank you all for participating in today's call. Joining me are Tim Herbert, Chairman and Chief Executive Officer; and Matt Osberg, Chief Financial Officer. Earlier today, we released financial results for the 3 months ended June 30, 2026. A copy of the press release is available on our website. On this call, management will make forward-looking statements within the meaning of the federal securities laws. All forward-looking statements, including, without limitation, those relating to our operations, financial results and financial condition, investments in our business, full year 2026 financial and operational outlook and changes in market access and different aspects of coding or reimbursement are based upon our current estimates and various assumptions. Forward-looking statements involve material risks and uncertainties that could cause actual results or events to materially differ. Accordingly, you should not place undue reliance on these statements. For a discussion of these risks and uncertainties, please see our filings with the Securities and Exchange Commission, including our periodic reports on Form 10-K and 10-Q as well as the Form 10-Q, which we filed this afternoon with the SEC for the quarter ended June 30, 2026. Inspire disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information and speaks only as of the live broadcast today, August 3, 2026. With that, it is my pleasure to turn the call over to Tim Herbert. Tim? Timothy Herbert: Thank you, Ezgi, and thanks, everyone, for joining us today. On the call today, I will provide some key takeaways of our second quarter results and updated outlook before providing an update on coding and reimbursement. I'll then turn the call over to Matt, who will provide additional insights on our second quarter and full year financials. We will then open the call up for questions. Prior to discussing the operations of the quarter, we always highlight that the focus of the Inspire team as well as health care professionals is to deliver the highest possible patient outcomes. And during this call, we will highlight the impressive safety and efficacy of the Inspire V system and also the emerging data demonstrating long-term cardiovascular health associated with the use of Inspire therapy. We are pleased to have delivered results ahead of our expectations for the second quarter. During the quarter, we continue to make progress working with our sales team and customers to navigate the evolving coding and reimbursement environment and delivered adjusted operating income and positive cash flow ahead of expectations through continued disciplined cost management. Given our performance, we are increasing our 2026 outlook for revenue, adjusted operating margin and adjusted earnings per share. I'd like to start by providing an update on coding and reimbursement. Let me address this across the short, mid and long terms. In the short term, we are continuing our efforts to provide Inspire V coding and reimbursement education and support to our customers. As we are starting with our highest volume centers, these represent disproportionately higher percentages of our revenue. We have continued to see improved trends in key data points such as prior authorization submissions, and we will continue our support efforts in the second half of the year. The bottom line is enhanced coding and billing clarity for all payers, be it commercial, Medicare Advantage or Government Medicare. Each of the payer groups have coverage policies that clearly identify the coding to be used for Inspire procedures and the confusion created early in the year is being effectively managed. Let me provide a little more detail. The previously announced C-codes are now in place. And importantly, hospital and ASC reimbursement rates remain unchanged. These C-codes have also been adopted into the WISeR system for the 6 applicable states. We believe these changes should significantly reduce any uncertainty regarding the appropriate codes that customers should use for the Inspire V procedures. For surgeon reimbursement, the majority of the medical area contractors or MACs do not require use of a -52 modifier when billing CPT code 64582 for Inspire V procedures. Two MACs, however, currently require the modifier. Based on available data, the payment reduction applied by those MACs has ranged from 0% to 30% of the current national average Medicare payment of $723. We have placed significant emphasis on educating customers regarding the documentation requirements and related considerations for reporting Inspire V procedures using CPT code 64582 with the -52 modifier. Turning to midterm actions. CMS has issued its proposed 2027 OPPS and PFS reimbursement rates. For Medicare facility reimbursement, CMS has proposed increasing hospital outpatient reimbursement for the Inspire V procedure to $35,414, an increase of approximately $3,900 or 12% over 2026 rates. CMS has also proposed increasing ASC reimbursement to $31,722, which is an increase of approximately $4,200 or 15% increase over 2026 rates. While these proposed increases are very encouraging, we are not making any assumptions regarding future reimbursement levels until CMS publishes its final rates in November. On the physician fee schedule, CMS has proposed 2027 physician reimbursement of approximately $699 for CPT code 64582. This represents a year-over-year decrease of approximately 4%, driven primarily by a reduction in the physician RVU rate as with the physician reimbursement proposals. The final physician reimbursement rates will be published in November. Looking further ahead, we are focused on supporting the development of a new Category 1 CPT code for a single lead Inspire system. As a reminder, our initial application was not approved at the April AMA CPT Editorial Panel Meeting. Following that decision, we met with reimbursement experts to better understand how we could improve the application and have incorporated that guidance into a revised application, which will be reviewed at the September CPT Editorial Panel Meeting. The revised application addresses 3 key areas. First, it corrects several coding issues related to subcodes for replacement procedures. Second, it is being submitted jointly with another participant in the industry, demonstrating broader stakeholder support. And third, it includes additional clinical evidence that was not presented in the initial submission. If the revised application is approved, the process moves to code valuation and reimbursement review, keeping the proposed new CPT code on track for implementation on January 1, 2028. With coding clarification improving, we feel we can more aggressively refocus our efforts on improving patient flow and revenue growth. As such, and aligning with our earnings results, we are announcing a strategic growth plan called Project Horizon, which is intended to accelerate revenue growth by investing in initiatives designed to enhance patient flow. We are creating this capacity by optimizing our organizational structure to better align resources with revenue growth initiatives. In addition, we are optimizing our supply chain by consolidating production to support quality, scale and efficiency. Through the actions of Project Horizon, we expect to create $30 million of annualized growth investment capacity, which we intend to invest in areas that we believe have the largest growth opportunities for us to further penetrate the OSA market. Our primary area of focus will be expanding patient access to care, improving patient education and engagement and helping appropriate patients navigate the treatment journey with the information they need to make informed decisions about Inspire therapy. Although Project Horizon is still in its early stages, and we are continuing to refine our growth investment priorities, one area where we have already seen encouraging results is the addition of prior authorization support capabilities within the SleepSync platform. These tools help support patients as they navigate the coverage approval process and have been very well received during the pilot phase. Based on that early success, we are increasing our investment in this initiative to further facilitate patient access to therapy. Another example is Inspire Connect, a program designed to enhance the post-implant patient experience for providing patients with timely education and support throughout their Inspire journey. The program is intended to help standardize key aspects of the patient experience by engaging with patients at appropriate intervals following implant to ensure that they have the information and resources needed to understand what to expect during activation and acclamation process. We believe this additional support can improve patient confidence and preparedness, helping patients make informed decisions and navigate their therapy journey more effectively. As we move forward with Project Horizon and our efforts to reinvigorate revenue growth, I look forward to providing additional updates on these and other initiatives as investments that will support our long-term growth strategy. Switching to patient outcomes. We remain excited about the clinical outcome data on Inspire V. At the recent American Academy of Sleep Medicine Conference in Baltimore in June, we presented the full results from the Inspire V trial conducted in Singapore. While we have previewed some of the early data points, including inspiratory overlap, this was the first time we showed the full trial results, including the ability of the new accelerometer-based sensing technology and the safety and efficacy of the Inspire V implant. In addition, multiple presentations highlighted the growing body of evidence supporting Inspire therapy, particularly in improving cardiovascular risk markers. Separately, Inspire highlighted additional research at its exhibit booth, including recent peer-reviewed articles on hypoxic burden and cardiovascular outcomes. The first article I want to highlight was a secondary analysis from the STAR trial that demonstrated significant reductions in hypoxic burden, a key measure of the total impact of oxygen desaturation events during sleep, integrating the depth, duration and frequency of these events to quantify sleep apnea severity. These findings reinforce hypoxic burden as an emerging and clinically relevant endpoint and align with a growing number of studies evaluating cardiovascular outcomes in patients treated with Inspire therapy versus continuous positive airway pressure and untreated populations. Another article compared clinical outcomes between hypoglossal nerve stimulation and CPAP in OSA patients using data from the TriNetics database and compared a masked group of 3,525 patients in each group. The findings demonstrated that the hypoglossal nerve stimulation cohort has significantly lower odds of several factors, including stroke, myocardial infarction, atrial fibrillation, hospitalization, acute heart failure and others. The conclusion was that hypoglossal nerve stimulation may offer systemic benefits and reduce health care burden compared to CPAP. We also are excited to announce the publication of the PREDICTOR study, which identified body mass index and neck circumference as predictors of complete concentric collapse. These findings suggest that many patients may be screened for Inspire therapy eligibility without requiring drug-induced sleep endoscopy, potentially reducing diagnostic burden, time to treatment and health care costs. A big contributor to our strong body of clinical evidence is our dedication to be at the forefront of innovation in OSA. As such, we continue to make progress with our research and development efforts in 2026 with ongoing work on Inspire V. Before I wrap up, I want to thank Casey Tansey for over 18 years of service on our Board of Directors. Casey was one of the first venture investors to recognize the potential impact of Inspire therapy, led the Series A financing back in 2007 and has provided years of valuable mentorship, leadership and perspective. At the same time, we are excited to welcome Mike Carroll to our Board of Directors. Mike is a veteran of the medical device industry with significant executive leadership and Board experience, and we look forward to his guidance and contributions to our Board. In closing, we continue to believe that there is a large untreated population of people struggling with sleep apnea that can benefit from Inspire therapy, and we continue to be encouraged by the strong adoption of Inspire V and the positive data we continue to collect. We remain focused on investing in our growth and providing the best therapy for patients and helping our customers navigate what we believe will be a temporary market disruption related to coding and reimbursement. We are actively addressing the challenges posed by this disruption, and we remain excited about our product and the market opportunity to improve the lives of our patients as we've already done for over 140,000 patients since our inception. We will continue to take actions to position the company for long-term profitable growth and believe that we have the right strategies in place to drive long-term stakeholder value. I will now turn the call over to Matt. Matthew Osberg: Thank you, Tim, and good afternoon, everyone. First, I'll begin with a review of the second quarter results, then follow with some further details on Project Horizon and finish with commentary on our outlook for the remainder of the year. Looking at the second quarter results, we are pleased with our sales execution, continued cost discipline and focus on spending priorities, which helped us to deliver profitability ahead of our expectations. Revenue decreased 7.6% to $200.6 million, primarily reflecting the impact of coding and reimbursement disruption, including the impact of the trend of declining preauthorizations that we saw in the first quarter. Operating margin improved primarily driven by gross profit expansion due to a higher mix of Inspire V and lower stock-based compensation costs due to an accelerated stock-based compensation charge recognized in the prior year. Adjusted operating margin declined primarily driven by unfavorable leverage from lower sales, partially offset by gross profit improvement due to a higher mix of Inspire V. Adjusted operating income was favorable to our expectations, primarily driven by continued spending discipline, favorable volume and rate impacts in gross profit and the timing of some planned spending shifting into the second half of the year. The effective tax rate was 89.9%, primarily driven by the tax impacts of stock-based compensation and executive compensation limitations. Additionally, in the prior year period, we maintained a full valuation allowance against federal and state deferred tax assets. The adjusted effective tax rate was 41.2%. Given our pretax income is a relatively small base, certain tax charges can have a material impact on our tax rate. Additionally, the tax impact of stock-based compensation can be material and may have significant variability from period to period. Diluted EPS was $0.01 and adjusted diluted EPS was $0.14 for the quarter. Our adjusted EBITDA margin, which excludes the impact of stock-based compensation, declined 90 basis points to 19.4%, primarily due to the decrease in adjusted operating margin. Turning to cash flow and the balance sheet. Operating cash flow was $23.2 million for the quarter and $36.1 million for the year-to-date period, an improvement of $40 million compared to the first 6 months of the prior year, primarily driven by improved working capital. Our balance sheet remains strong with no debt and $415 million in cash and investments at the end of the quarter. Our strong cash position allows us to remain focused on making investments to drive profitable growth. As Tim mentioned, we announced a strategic growth plan called Project Horizon, which is intended to create additional capacity to invest in initiatives to drive revenue growth. We expect to incur a total of $20 million to $25 million of pretax restructuring charges in connection with Project Horizon, with approximately 90% of the charges expected to be recognized in the third quarter. Approximately $16 million to $20 million of these charges are expected to be noncash impairment charges related to production equipment at vendors that will no longer be used as we consolidate our supply chain with the balance of the charges relating to employee separation costs. The actions of Project Horizon are expected to generate approximately $30 million of annualized growth investment capacity, which we expect to direct to our highest revenue growth initiatives. We expect the majority of actions related to the restructuring plan to be completed in the third quarter and all actions to be substantially complete by the end of the year. Turning now to our 2026 outlook. We are revising our full year revenue outlook to be in the range of $835 million to $875 million. This range incorporates our Q2 revenue performance and our expectations for coding and reimbursement disruption for the remainder of the year. We estimate that our second quarter results were adversely impacted by coding and reimbursement challenges and the WISeR program by approximately $40 million. We expect the adverse impact of these items to decrease sequentially as we move into the third and fourth quarters as we continue our education efforts and our customers build experience with coding and billing processes. For the full year, we are currently estimating the total impact of these items to be in the range of $120 million to $130 million. The estimated impact of these items on our results reflect high-level assumptions based on currently available data and incorporate inherent uncertainty related to quantifying how these items impact customers, physicians and patients. In addition to revising our revenue outlook, we are also revising our outlook on profitability metrics for the year. We now expect adjusted operating margin in the range of 4% to 6%, diluted EPS in the range of a loss of $0.42 per share to earnings of $0.17 per share and adjusted diluted EPS in the range of $1.05 to $1.45. The changes to the adjusted profitability metrics primarily represent the impact of operating performance in Q2, while the forecasted impact of restructuring charges is expected only to impact the GAAP metrics. Our updated outlook assumes an effective tax rate of 95% to 100% and an adjusted effective tax rate of 30% to 35%. The increase in the forecasted effective tax rate as compared to our previous outlook primarily relates to lower pretax income driven by forecasted Project Horizon restructuring charges and incremental impacts of stock-based compensation and executive compensation limitations. Our outlook assumes estimated weighted average diluted shares outstanding of approximately 29.4 million and capital expenditures between $35 million and $40 million. Looking at the cadence of the year for the third quarter, we are forecasting an 8% to 10% year-over-year revenue decline, primarily due to the expected ongoing impact of coding and reimbursement. Additionally, we expect to deliver approximately breakeven adjusted operating income for the third quarter as the operating income impact of the forecasted sequential increase in revenue is offset by an expected sequential step-up in marketing expense. In closing, despite the top line pressure in the first half of the year, I am pleased with our spending discipline and focus on prioritizing investments in revenue-generating activities. The additional growth investment capacity created as a result of Project Horizon will enable us to make further investments to accelerate our growth. Our team remains committed to providing strong patient outcomes and supporting our customers to expand the adoption of Inspire therapy while delivering value for our shareholders. This concludes our prepared remarks. Dilem, you may now open the line for questions. Operator: [Operator Instructions] And I show our first question comes from the line of Jon Block from Stifel. Jonathan Block: Tim, maybe you can talk a little bit about what you're seeing in those 2 MAC regions that have the 0% to 30% dock fee cut from a utilization standpoint? And is there really a big delta versus the other regions? And then also sort of tack on, can you update us on what percent of your overall centers are, call it, up to speed with these billing changes? And I don't know if you want to give it as a percent of overall centers or maybe as a percent of revenue exposure. Timothy Herbert: Start with number one, when we looked at the regions of the 2 MACs and generally, when surgeons provide the billing with the materials to describe the reduction in services, they are able to minimize any kind of reduction. And some of the hospitals when they bundle the billing along with the payment tend to just submit in, and that's where you see the greatest amount of reduction. So we believe that we'll continue to educate and make sure that centers and surgeons provide the requested information. And by providing that information, we've been able to see reductions being minimized. So we'll continue to build on that data set. But again, we're comfortable with where we are today, and we'll continue to provide further education on that. As far as percent of centers going through, as we talked earlier, we have an active program to start with our highest level of centers and work through that entire list as we work high to low. So the number of centers that we're training today tend to be the top 25%. We're working through the majority of those and tend to be into the next wave, and we'll be able to educate most of them in the third quarter. Operator: And I show our next question in the queue comes from the line of Adam Maeder from Piper Sandler. Adam Maeder: Congrats on the progress. Maybe I could ask about the strategic growth plan. I think you're calling it Project Horizon. Just wanted to, I guess, better understand exactly what that entails. So it sounds like there's some restructuring there. You're freeing up $30 million of capacity for redeployment, mostly that has to do with the supply chain. But can you just help us better understand exactly how those funds are going to be redeployed? How they're going to drive growth going forward? And is that something that could impact the business in the back half of '26? Or is it more 2027? Timothy Herbert: Sure. We've grown very fast over the years, and the organization has grown pretty quickly to be able to handle the level of demand for Inspire. So we've taken the opportunity with Project Horizon to really look at areas where we can be more efficient. And with that, we've been able to identify the areas of savings. So we will be implementing several of those new tasks. Currently, we believe the majority of these are targeting patient flow, which you'll see more in '27. And as Matt kind of laid out what we expect to see in the latter half of '26. So more to come on the specific projects. But again, we believe this is really going to help us reenergize growth, particularly in '27 and beyond. Operator: And I show our next question comes from the line of Robbie Marcus from JPMorgan. Robert Marcus: Great. Two for me. Maybe just to follow up on the last question. Tim, you talked about part of the restructuring was around manufacturing. I just want to make sure, are you eliminating any dual source manufacturing? Like are you going to single source to save money? Maybe just elaborate there. It's interesting. We don't usually hear manufacturing as part of the cost savings. So just love to hear more. Timothy Herbert: We'll be able to provide more information in the near future. Right now, our products are single sourced. And so we're looking to build the quality and responsibility of having a strong supply chain, and we will be building efficiencies into that manner as we are looking to bring other manufacturing sites on that provides opportunities there. So we'll provide greater details into that, but we want to make sure that we have secure supply as we progress and improve our ability to scale with quality. Operator: And I show our next question comes from the line of Anthony Petrone from Mizuho Americas. Anthony Petrone: Maybe, Tim, one on just how backlog is trending and then one on WISeR real quick. When 64568 sort of went away and you had to use sort of the -- or at least the thought of the C codes plus modifiers, it just kind of froze the channel. And it sounds like certainly certain centers just kind of punted on doing cases. So is there anything you can share as to where you think maybe the backlog sits as we sit here in early August from this warehousing effect? And then real quick on WISeR. We picked up from just some channel checks that potentially it can go away that it's being contemplated down in D.C. that there's a push to potentially just do away with WISeR. Have you heard that? And if that's the case, what do you think the probability that WISeR goes away, say, early next year? Timothy Herbert: Sure. The backlog is really focused on those patients that are trying to get into the process, but unfortunately, centers had to take a little bit of a pause, and we saw that when we discussed the submission of the number of prior authorizations that we saw earlier in the year and knew that, that would have an impact in the second quarter. And as we mentioned in our prepared remarks that we are seeing improvements in the trends, including increase in the number of prior authorization submissions. So centers are getting comfortable with the coding and they're getting experience with it to see that they are receiving proper reimbursement levels and that they're able to start to get back to their utilization levels, and we can start working through that backlog as we move forward. As far as WISeR goes, yes, we hear the same commentary, although we need to continue to work that it's going to not only exist in those 6 states, but that it could expand into additional states. And so we don't want to wait to see what the final resolution will be, but the point is we did see that the C codes are now incorporated into WISeR. We continue to learn how to operate in a WISeR environment, and we're prepared to move forward in the rest of the year. And so it doesn't have as much of a disruptive effect as it did in the first half of the year. Operator: And I show our next question comes from the line of Larry Biegelsen from Wells Fargo. Larry Biegelsen: Matt or Tim, it looks like -- if I'm doing the math right here, it looks like you're expecting Q3 on a year-over-year basis to be slightly worse than Q2 despite some of these trends getting better. So why is that? And related to that, the guidance range is very wide. It implies like down 13% at the low end and down 5%, I think, at the high end. What's assumed at the low and the high end? Matthew Osberg: Yes, I'll start with that. Thanks for the question, Larry. So from a Q3 perspective, you're right, it's a larger year-over-year decline. But sequentially, we're looking at higher revenue between Q3 -- or Q2 and Q3. So looking at continuing to build some momentum on the top line, although year-over-year, it's still down more than in Q2. And then the range is really just reflecting that we've had a lot of volatility during the year. There's been a lot of action. We were very happy with how we performed in Q2, and we just want to be cautious about narrowing the range as we look out for the rest of the year, and we're focused on delivering within that range. Operator: And I show our next question comes from the line of Travis Steed from Bank of America. Travis Steed: The coding impact went from $120 million to $150 million to $120 million to $130 million, so lower. I think that implies second half better, but the revenue guide for the full year didn't change. So just want to make sure I understand that. And then when you think about 2027 before you were saying kind of return to growth, just kind of curious about how your visibility in 2027 is shaping up at this point? And any color you could give on '27. Matthew Osberg: Travis, it's Matt. I'll jump in on the first one. Yes, you're right. The real reduction in that range was primarily due to what we saw in the second quarter. We had originally thought a $40 million to $50 million impact from reimbursement impacts, and that was on the low end of the range. So that helped really bring down that range for the year, slightly better in the second half of the year, but most of that benefit was in the second quarter. From a 2027 perspective, Tim, I don't know if you want to... Timothy Herbert: Yes, sure, Travis. In 2027, we see opportunity that we're still evaluating. Number one, with the Horizon, we're able to increase investments into our growth initiatives. We have already been investing in our initiatives, and we'll continue to do that, driving growth. We continue to see improvements with the coding environment and comfort around the coding levels. And we're further encouraged with the proposed rules from CMS on facility reimbursement, although we need to wait until November to see where those numbers come out. So in that, we have to wait. We don't want to make comments on guiding on '27 yet, but we like what is coming together and really want to lean into the clinical evidence that we're seeing with Inspire V and more importantly, getting a new support from cardiovascular health with the clinical evidence being posted on that front. Operator: And I show our next question comes from the line of Richard Newitter from Truist Securities. Richard Newitter: Maybe the first, just this has come up a couple of times. Just you've had varying responses quarter-to-quarter. But where are we on kind of GLP-1 impact from as best as you can see and how the trend is going on the business? And then also the second item there is capacity. I'm not sure if the $30 million in reinvestment to growth initiatives, like to what extent are those things that will help increase capacity or getting more or new types of physicians to kind of come in and be able to do the procedure to drive higher utilization? Would love any insights on that. Timothy Herbert: Thanks, Rich. GLP-1 trends, well, GLP-1s have been around for a longer period of time with the positive indication for sleep apnea. So we're seeing more sleep physicians being able to prescribe that. But again, I don't think it really changes our overall demand for Inspire therapy as we move forward. And we believe and continue to believe that GLP-1s will be a long-term benefit to help people lose weight to get them into the -- and to qualify for Inspire therapy. But we continue to track our inbounds and track patients looking to get appointments with health care providers and we see the increase in prior authorization. So we do see capacity returning. The data looks strong, and we do believe long-term GLP-1s will help. Capacity is always a key factor. And now that we're getting more comfort with the coding and the reimbursement aspects and clarity is starting to gain with each payer that we're able to lean in on that. Inspire V is -- can help with capacity in itself because ENT surgeons are comfortable performing that procedure. But we are looking to expand, not only with centers, but also with additional surgeons. And so we're going to lean into that, and that will be an initiative that we'll lean into in the future. Operator: And I show our next question comes from the line of Michael Polark from Wolfe Research. Michael Polark: Just 2 items for me. Territory count in the quarter. If you said it, I missed it, I'd welcome that update. And the related piece to that is kind of direction of travel for that count as Project Horizon gets implemented further down? Or is it reaching a stable level? And the second thing I'm interested in learning more about is Inspire IV versus Inspire V mix either in the second quarter, where are we and what's contemplated for the back half on that metric? Timothy Herbert: Thanks, Mike. Territory manager territories that we talk about, we're still at 280 and stable on that end. We have increased the number of field clinical representatives. That was a strategy that we implemented previously to get that ratio back to 1:1. We've actually surpassed that, and we actually have 301 FCR areas that we're looking at. So a little bit higher than the 1:1 ratio because we think this can drive efficiencies in each of the territories and help us as we grow capacity and handle the demand from the patients. As far as Inspire IV and V ratios in the field, Inspire V is by far and away the majority of the implants performed in the second quarter, and we expect that to continue as we move into the rest of the year in '27. We do still have customers that utilize the Inspire IV technology based on CMS reimbursement for their Medicare cases. As you know, that Medicare and 64582 is adjusted for both geographic as well as academic centers. So in those territories where the reimbursement isn't as high, there are some centers that continue to use Inspire IV. But the majority of centers have transitioned over to Inspire V. Operator: And I show our next question comes from the line of David Rescott from Baird. David Rescott: I wanted to ask about the PREDICTOR and the cardio data that you had at Sleep. And I'm more curious along the lines of if and why, how you would expect to be able to leverage that either to just drive increasing utilization or potentially extend the reach beyond the core channel you're in today? Is that something where you now have the data in place and it's something that could begin to benefit as early as 2027? Or are there further publications that we'd be expecting to see and maybe it's, hey, reimbursement is in place by 2028, and that's really when you start to pump the investment behind that? Timothy Herbert: Thanks, David. Two different answers coming out, yes. So from a PREDICTOR standpoint, yes, with the publication, we can pursue this a little bit more aggressively. I think the -- there are patients that will be able to go through the prior authorization process with their BMI less than 32, along with a neck circumference measurement where they won't need a DISE procedure. Again, the algorithm in the publication is patients with a BMI above 32 are more susceptible to complete concentric collapse and probably should continue to receive a drug-induced sleep endoscopy prior to Inspire. So we're going to start pursuing this and target areas upfront and be able to report back on that. But we're very happy that we have the publication in place. Cardiovascular data is going to continue to grow. Epoxic burden is real, and it's correlated to cardiovascular health. We already know of numerous publications in the works and additional research being performed independent by some of our leading academic institutions in the United States. And we'll continue to build on that and communicate that with the cardiovascular physicians and societies to show the benefits that Inspire therapy can bring to their patients in the long run. So a whole different channel that we're looking at to educate on the benefits of Inspire therapy and a lot more publications coming on that front. Operator: And our next question comes from the line of Michael Sarcone from Jefferies. Michael Sarcone: So 2 for me. One, Tim, maybe can you comment on the competitive environment and kind of what's the latest and greatest there and the trends you're seeing? And then in terms of Project Horizon and redeploying some of the phase into growth initiatives, how are you thinking about that in the context of DTC spending? Timothy Herbert: Very good, Michael. From a competitive standpoint, I think we just focus on the Inspire procedures. We focus on making that available to the patients demanding therapy and coming to our website. We know that there are centers who will trial competitive devices, but we don't see a significant impact of that at this point. We know another company is approved but still working on preparing for launch and haven't -- they obviously don't have a presence because they haven't launched their product yet. So again, we think that we need to just focus on Inspire V and the benefit that, that brings to our potential patients. As far as Horizon, we look at DTC as one of our tools, but we don't want to say that we're going to fully increase DTC to the full level. We think there's other areas that we really want to focus on in regards to patient flow, which includes helping patients once they come to a website to make a connection with the health care professional and that way, we'll be able to streamline that process. We did mention PREDICTOR's potential avenue and really going back and highlighting the data that we have around cardiovascular health. So there's a lot of different areas that we want to go down, not just immediately dumping into DTC. Operator: And I show our next question comes from the line of Brett Fishbin from KeyBanc Capital Markets. Brett Fishbin: You mentioned in the prepared remarks that one of the items that the revised CPT application addresses is in regards to subcodes for replacement procedures. So I wanted to just follow up on that topic and ask about the volume of replacement procedures you're currently seeing and whether this is starting to become a material part of the overall revenue mix in 2026? And then just if so, how should we think about the impact on ASPs for the company per procedure and if there's like a margin impact from procedures starting to shift to replacements from new patients? Timothy Herbert: Absolutely, Brett. You got about 4 questions in there. Let me go through these. So the CPT, when the application went in, there was already subcodes there for the replacement revision. There was a juggling during the meeting that caused confusion and disruption. And so that's all been cleared up now. And so the subcodes in the application now are clear and defined, and we addressed that right upfront. But you do bring up the next key point, which is we are many years since approval back in 2014 from the FDA and with our average battery life of 11 years, we are starting to see patients come around for their replacement devices. What has been overshadowed by the coding and reimbursement is that the reimbursement CPT code for a replacement Inspire V device was actually moved to a Level 5 APC, ambulatory procedure classification from a Level 4. So that reimbursement has gone up appropriately to support replacements and the ASP for that device is commensurate with the combination of the pressure sensing lead and the old Inspire IV neurostimulator. So in a pretty good position from that, and we should be okay with margin on that. But again, we're starting to ramp the number of patients coming in. But again, a relatively small part of our overall business dating back to 11 years back to implants back in 2014, '15 and '16. Operator: And I show our next question comes from the line of Daniel Markowitz from Evercore ISI. Daniel Markowitz: I wanted to ask in terms of the program to work with centers and improve billing certainty, can you talk about what you've seen early on? It would be helpful to know how many centers you've worked with thus far and what you've seen in terms of activity levels before versus after? And then if I could squeeze one really quick one in. International isn't a huge part of the business. But if I'm looking at the numbers, there was a really nice step-up internationally. Can you talk a little bit about what caused that? Timothy Herbert: Absolutely, Daniel. When we look at the centers, as we mentioned in the prepared remarks, we start with the highest volume centers and educate through that process. There are many centers that are comfortable with just receiving the material and they were able to gain confidence in the coding that they were able to give reimbursement back and thereby get back to their volumes. Other centers want one-on-one meetings to walk through the coding, understanding the C-codes, what that means, how does that play with commercial payers versus Medicare Advantage versus fee-for-service Medicare? So we're able to sit down and work with them. So as we mentioned earlier, we're working through that top 25% then actively in the next group of centers. We can see confidence in being able to be reimbursed when we start to see their volumes come back. As such, that is one of the trends along with prior authorization numbers that gives us confidence for the second half of the year. International had a very good Q2. And I think that it's about focus and the growth that the international team is working and basically -- primarily the core Continental Europe as we're seeing the greatest amount of growth and teams being very focused in those areas with upstarts in France because they just recently got countrywide reimbursement. We know that, that's going to continue to grow along with the mainstay with Germany, Austria, Switzerland, Netherlands, Belgium and the contributions from the U.K. and some other contributions from overseas with Japan and Singapore as well. So good quarter for the international team. They're doing a very good job in -- with their growth. Operator: And I show our next question comes from the line of Keith Hinton from Freedom Capital Markets. Keith Hinton: Just one for me around the assumptions to get to the top and the low end of the operating margin guide. And I just want to understand in terms of Horizon, should we expect to see kind of the reinvestment of those cost savings right away? Or could there be a small timing issue where costs temporarily drop and then step back up? Kind of how should we think about that from an OpEx perspective? Timothy Herbert: Yes. I would expect there might be a little bit of favorability in the third quarter, but offsetting that as we start to move into the fourth quarter and ramping up some of those investments, and that's incorporated into the outlook that we provided. Operator: And I show our last question in the queue comes from the line of Mike Kratky from Leerink Partners. Michael Kratky: Just one for me, but can you talk about how U.S. implant volumes, prior auths and procedures trended sequentially on a monthly basis over 2Q? And what have you seen so far in July to help inform your outlook? Timothy Herbert: Well, I think that early on, we talked about prior authorizations as kind of being a leading indicator. We're seeing trends increase from that standpoint and not necessarily going to comment too much on implants in July. Typically, we do see implants continue to progress as we go through a quarter. But again, the positive trends that we're seeing, we're gaining comfort around prior authorization submissions as our leading indicator. As always, thank you. But as always, I'm grateful to our team of dedicated employees for their enthusiasm, hard work and continued motivation to achieve successful and consistent patient outcomes. The team's commitment to patients remains unmatched and is the most important element of our success. For all of you on the call, we appreciate your continued interest in and support and look forward to providing you with further updates in the months ahead. Operator: This concludes today's conference call. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Inspire Medical Systems. The Motley Fool has a disclosure policy. Inspire Medical Systems (INSP) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Hims & Hers Health, Inc. HIMS is scheduled to report second-quarter 2026 results on Aug. 10, after the closing bell. In the last reported quarter, the company’s loss per share of 18 cents lagged the Zacks Consensus Estimate of earnings per share of 4 cents. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on one occasion and missed thrice, delivering a negative earnings surprise of 84.7%, on average. Let’s check out the factors that have shaped HIMS’ performance prior to this announcement. Hims & Hers’ second-quarter 2026 results are likely to reflect accelerating demand across its U.S. platform, supported by newer specialties such as testosterone, menopause and Labs, alongside the broader range of branded GLP-1 treatments. During the first quarter, management noted that weight-loss adoption was near record levels, with more than 125,000 Wegovy shipments fulfilled within six weeks and the business tracking toward more than 100,000 new weight-loss subscribers per month. This is likely to have supported subscriber growth and revenues during the to-be-reported quarter. The weight-loss business is likely to have remained a major growth driver following HIMS’ shift toward branded products. Almost all new weight-loss business was coming through branded offerings, while the launch of generic semaglutide in Canada in May may have further supported international weight-loss demand. International operations may also have benefited from the June 2 completion of the Eucalyptus acquisition, which marked Hims & Hers’ entry into Australia. The company is likely to have recorded a partial-quarter contribution from its existing brands and customer base, thereby driving up the second quarter of 2026 revenues. HIMS’ marketing efficiency may have provided some support to profitability in the to-be-reported quarter. Management cited stronger retention, organic cross-selling and lower-cost acquisition channels as drivers of improved marketing efficiency. The company expects these efficiency gains to continue, though with some quarter-to-quarter volatility. However, second-quarter 2026 margins are likely to have faced pressure from the transition toward one-month weight-loss shipping cycles and the increasing mix of weight loss, Labs and international revenues, which carry lower gross-margin profiles. Continued spending on technology, facilities, operational capabilities and international expansion may also have weighed on profitability during the to-be-reported quarter. For second-quarter 2026, the Zacks Consensus Estimate for revenues is pegged at $690.2 million, implying an improvement of 26.7% from the prior-year quarter’s reported figure. The consensus estimate for loss per share is pegged at 7 cents. Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold), along with a positive Earnings ESP, has higher chances of beating estimates. This is not the case here, as you can see below. Earnings ESP: Hims & Hers has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. Zacks Rank: The company currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here. Hims & Hers Health, Inc. price-eps-surprise | Hims & Hers Health, Inc. Quote Over the past three months, Hims & Hers’ shares have gained 7.7%, underperforming Medical Info Systems’ 17.7% gain. HIMS’ shares also underperformed the Zacks Medical sector’s gain of 10.3%, but outperformed the S&P 500’s increase of 2.9%. Image Source: Zacks Investment Research Hims & Hers’ peers like Hinge Health, Inc. HNGE and Inspire Medical Systems, Inc. INSP have outperformed the company. However, HIMS’ other peer, Tempus AI, Inc. TEM, has underperformed the company. HNGE, INSP and TEM’s shares are up 42.9%, up 33.1% and down 7.5%, respectively, in the same time frame. From a valuation standpoint, HIMS’ forward 12-month price-to-sales (P/S) is 2.1X, a discount to the industry's average of 5.1X and its one-year median of 2.5X. Image Source: Zacks Investment Research The company is trading at a discount to its peers, Hinge Health and Tempus AI. However, Hims & Hers is trading at a premium to its peer, Inspire Medical. Hinge Health and Tempus AI’s P/S currently stand at 6.6X and 4.5X, respectively, while the ratio for Inspire Medical stands at 1.9X. This suggests that investors may be paying a lower price relative to the company's expected sales growth. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Hims & Hers Health, Inc. (HIMS) : Free Stock Analysis Report Inspire Medical Systems, Inc. (INSP) : Free Stock Analysis Report Tempus AI, Inc. (TEM) : Free Stock Analysis Report Hinge Health Inc. (HNGE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Revenue: $200.6 million, a decrease of 7.6% year-over-year, impacted by coding and reimbursement disruption. Adjusted Operating Margin: Declined, primarily due to unfavorable leverage from lower sales, partially offset by gross profit gains. Adjusted EBITDA Margin: Declined 90 basis points to 19.4%. Diluted EPS: $0.01 for the quarter. Adjusted Diluted EPS: $0.14 for the quarter. Operating Cash Flow: $23.2 million for the quarter and $36.1 million year-to-date. Cash and Investments: $415 million at the end of the quarter, with no debt. Full-Year 2026 Revenue Outlook: Revised to a range of $835 million to $875 million. Full-Year 2026 Adjusted Operating Margin Outlook: Expected in the range of 4% to 6%. Full-Year 2026 Diluted EPS Outlook: Expected in the range of a loss of $0.42 to earnings of $0.17 per share. Full-Year 2026 Adjusted Diluted EPS Outlook: Expected in the range of $1.05 to $1.45. Project Horizon Restructuring Charges: Expected to incur $20 million to $25 million in pre-tax charges, with approximately 90% recognized in the third quarter. Warning! GuruFocus has detected 7 Warning Signs with INSP. Is INSP fairly valued? Test your thesis with our free DCF calculator. Release Date: August 03, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Inspire Medical Systems Inc (NYSE:INSP) delivered second-quarter results ahead of expectations, with revenue of $200.6 million and improved profitability despite coding and reimbursement headwinds. The company is increasing its 2026 full-year outlook for revenue, adjusted operating margin, and adjusted earnings per share, reflecting confidence in its strategic initiatives. CMS has proposed a 12% increase in hospital outpatient reimbursement and a 15% increase in ASC reimbursement for the Inspire 5 procedure in 2027, which could boost future revenue. The launch of Project Horizon is expected to create $30 million in annualized growth investment capacity, which will be reinvested into patient access and education initiatives to accelerate growth. Strong clinical data, including the full results of the INSPIRE-5 trial and publications on hypoxic burden and cardiovascular outcomes, support the therapy's long-term benefits and market differentiation. The company is seeing improved trends in prior authorization submissions and coding clarity, indicating that the reimbursement disruption is being effectively managed. International revenue saw a strong step-up in Q2, driven by growth in continental Europe, France, and other markets, diversifying revenue streams. Revenue decreased 7.6% year-over-year in Q2 2026, primarily due to the ongoing impact of coding and reimbursement disruption, including a decline in preauthorizations. The company estimates a total adverse impact of $120 million to $130 million from coding and reimbursement challenges and the WISER program for the full year 2026. Two Medicare Administrative Contractors (MACs) require a Dash-52 modifier for Inspire 5 procedures, leading to payment reductions ranging from 0% to 30% of the national average Medicare payment. The proposed 2027 physician fee schedule includes a 4% decrease in reimbursement for CPT code 64582, which could impact physician adoption. The company's revised application for a new Category 1 CPT code was not approved in April, and approval is not expected until at least September, with implementation potentially delayed to 2028. Project Horizon will incur $20 million to $25 million in pre-tax restructuring charges, with 90% expected in Q3, impacting near-term profitability. The company forecasts a year-over-year revenue decline of 8% to 10% in Q3 2026, indicating continued pressure from the reimbursement environment. Q: Can you provide more details on the strategic growth plan, Project Horizon, including how the $30 million in savings will be redeployed and whether it will impact the business in the back half of 2026 or more in 2027?A: Tim Herbert (CEO): Project Horizon is designed to optimize our organizational structure and supply chain to create $30 million in annualized growth investment capacity. We are focusing on expanding patient access, improving patient education, and helping patients navigate the treatment journey. While some initiatives, like prior authorization support within Sleep Sync, are already showing encouraging results, the majority of the growth investments will have a more significant impact in 2027 and beyond. Q: What are you seeing in the two MAC regions that require the -52 modifier, and what percentage of your centers are now up to speed with the billing changes?A: Tim Herbert (CEO): In the two MAC regions, we are educating surgeons to provide documentation describing the reduction in services, which minimizes payment reductions. We are working through our highest-volume centers first, covering the top 25%, and expect to educate most centers by the third quarter. We are seeing improved trends in prior authorizations as centers gain confidence in the coding and reimbursement process. Q: Can you elaborate on the manufacturing aspects of Project Horizon, specifically whether you are consolidating or eliminating dual-source manufacturing?A: Tim Herbert (CEO): Our products are currently single-sourced. Through Project Horizon, we are looking to build efficiencies and improve our ability to scale with quality. We are evaluating bringing other manufacturing sites online to ensure a secure supply chain, and we will provide greater detail on this in the near future. Q: How is the backlog trending given the coding disruption, and have you heard any commentary about the WISER program potentially being eliminated?A: Tim Herbert (CEO): The backlog is focused on patients trying to enter the process, but we are seeing improvements in prior authorization submissions as centers become more comfortable with coding. Regarding WISER, we hear the same commentary about its potential elimination, but we are prepared to operate in that environment. The C codes are now incorporated into WISER, which should reduce its disruptive effect in the second half of the year. Q: Why is the Q3 year-over-year revenue decline expected to be slightly worse than Q2, and what is assumed at the low and high ends of the wide guidance range?A: Matt Osberg (CFO): While Q3 is expected to show a larger year-over-year decline, we are forecasting higher revenue sequentially between Q2 and Q3, indicating continued momentum. The wide range reflects the volatility experienced during the year, and we want to be cautious given the ongoing coding and reimbursement challenges. We are focused on delivering within the range. Q: What is your visibility into 2027, and how are you thinking about the impact of GLP-1s and capacity expansion?A: Tim Herbert (CEO): For 2027, we see opportunities from Project Horizon investments, improving coding clarity, and encouraging proposed CMS facility reimbursement rates. GLP-1s have been around longer with a positive indication for sleep apnea, but we don't believe they change overall demand for Inspire Therapy. We see capacity returning as prior authorizations increase, and we are looking to expand both centers and surgeons to drive utilization. Q: Can you provide an update on the territory count and the Inspire 4 versus Inspire 5 mix?A: Tim Herbert (CEO): We remain at 280 territories, with 301 field clinical representatives, surpassing our one-to-one ratio target. Inspire 5 is the vast majority of implants performed in Q2, and we expect this to continue. Some centers still use Inspire 4 for Medicare cases in territories where reimbursement is lower, but the majority have transitioned to Inspire 5. Q: How do you plan to leverage the PREDICTOR study and cardiovascular data to drive utilization or expand reach?A: Tim Herbert (CEO): The PREDICTOR study allows us to pursue patients with a BMI below 32 and specific neck circumference measurements without requiring drug-induced sleep endoscopy, reducing diagnostic burden. We are starting to pursue this in targeted areas. The cardiovascular data, including hypoxic burden, is growing, and we will continue to educate cardiovascular physicians and societies on the benefits of Inspire Therapy, potentially opening a new channel. Q: Can you comment on the competitive environment and how Project Horizon savings will be used regarding DTC spending?A: Tim Herbert (CEO): We focus on our own therapy and don't see a significant impact from competitors. One company has approval but hasn't launched yet. Regarding DTC, we view it as one tool but not the primary focus. We are prioritizing patient flow initiatives, such as connecting patients with healthcare professionals and leveraging the PREDICTOR data, rather than immediately increasing DTC spending. Q: What is the volume of replacement procedures, and how does this impact ASPs and margins?A: Tim Herbert (CEO): We are starting to see patients return for replacements given the 11-year battery life. The reimbursement CPT code for replacement Inspire 5 devices was moved to a level 5 APC, increasing reimbursement appropriately. The ASP for the replacement device is commensurate with the combination of the pressure sensing lead and the Inspire 4 neurostimulator, and we are in a good position regarding margins. This remains a relatively small part of the business. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance in Q2 was ahead of expectations, driven by disciplined cost management and a higher product mix of the Inspire V system despite a 7.6% revenue decline. Revenue headwinds were primarily attributed to coding and reimbursement confusion, specifically impacting prior authorization submissions and center utilization levels. Management is actively addressing reimbursement friction by educating high-volume centers on C-code adoption and documentation requirements for physician billing modifiers. The company launched Project Horizon, a strategic initiative to optimize the organizational structure and supply chain to create $30 million in annualized growth investment capacity. Supply chain consolidation is being executed to improve quality, scale, and efficiency, resulting in one-time restructuring charges but long-term operational leverage. Clinical evidence continues to expand, with new data highlighting Inspire's ability to reduce hypoxic burden and lower the risk of major cardiovascular events compared to CPAP. The PREDICTOR study findings suggest that specific patient metrics like BMI and neck circumference may allow for screening without drug-induced sleep endoscopy (DISE), potentially accelerating the patient journey. Full-year 2024 revenue guidance assumes a total impact of $120 million to $130 million from coding and reimbursement disruptions, with impacts expected to decrease sequentially in the third and fourth quarters. Q3 revenue is forecasted to decline 8% to 10% year-over-year, reflecting the lag effect of lower prior authorizations from earlier in the year. Management is pursuing a revised Category 1 CPT code application for the single-lead system, with a September 2026 review and a target implementation date of January 1, 2028. Project Horizon investments will prioritize expanding patient access, enhancing the SleepSync platform's prior authorization tools, and standardizing the post-implant experience via Inspire Connect. Proposed 2027 CMS rates suggest a potential 12% to 15% increase in facility reimbursement for Inspire V procedures, though final rates will not be confirmed until November. The company expects to incur $20 million to $25 million in pretax restructuring charges related to Project Horizon, with 90% recognized in the third quarter. Restructuring costs include $16 million to $20 million in non-cash impairment charges for production equipment due to supply chain consolidation. Two Medicare Administrative Contractors (MACs) currently require a -52 modifier for physician billing, resulting in payment reductions ranging from 0% to 30%. The effective tax rate remains highly sensitive to stock-based compensation and executive compensation limitations due to the relatively small pretax income base. Management noted that while some MACs apply a 0% to 30% reduction, surgeons can minimize this by providing detailed documentation of services. Education efforts are currently focused on the top 25% of centers by volume to stabilize the majority of revenue exposure. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. The company is consolidating manufacturing sites to build better scale and quality control as they transition to Inspire V. The move is intended to secure the supply chain and create efficiencies that fund growth initiatives rather than just cutting costs. Management believes GLP-1s do not change overall demand and may actually serve as a long-term benefit by helping patients reach the BMI qualifications for Inspire therapy. Internal tracking of patient inbounds and prior authorizations shows that capacity and demand remain strong despite the prevalence of weight-loss drugs. Replacement volume is beginning to ramp as early patients from 2014 reach the end of the 11-year battery life. Reimbursement for replacements has improved (moved to Level 5 APC), and ASPs are commensurate with the new technology, protecting margins. International growth was driven by strong performance in Continental Europe, particularly Germany and newly established countrywide reimbursement in France. Management expects continued contributions from Japan and Singapore as these markets mature.

Inspire Medical Systems, Inc. INSP reported second-quarter 2026 adjusted earnings per share (EPS) of 14 cents, down 58.8% year over year. The figure beat the Zacks Consensus Estimate of a loss of 22 cents by 163.6%. GAAP EPS in the quarter was 1 cent compared to GAAP loss per share of 12 cents in the year-ago quarter. Inspire Medical registered revenues of $200.6 million in the second quarter, down 7.6% year over year. The figure beat the Zacks Consensus Estimate by 2.9%. Shares of INSP were up 10.3% during after-market trading following the second-quarter results. The stock has declined 43.4% in the year-to-date period compared with the industry’s 8.3% fall. However, the S&P 500 Index has gained 11.4% in the same period. Image Source: Zacks Investment Research The decline in sales was primarily caused by a decrease in U.S. revenues due to coding and reimbursement challenges. This was partly offset by an increase in international revenues. As of June 30, 2026, INSP operated 280 U.S. sales territories and employed 301 field clinical representatives compared with 295 territories and 275 representatives at the end of 2025. In the quarter under review, U.S. revenues totaled $187.3 million, down 9.6% year over year. Management attributed the weakness primarily to the evolving coding and reimbursement environment, which slowed prior-authorization activity and procedure volumes. International revenues totaled $13.3 million, up 33.6% year over year. The overseas gain partly offset the domestic decline, but the United States remained the dominant contributor to quarterly sales. In the second quarter, Inspire Medical’s gross profit decreased 6% year over year to $171.5 million. The gross margin expanded 150 basis points (bps) to 85.5%, primarily driven by a higher sales mix of the Inspire V system. Selling, general and administrative expenses decreased 7.7% year over year to $147.3 million. Research and development expenses declined 5.8% to $24.7 million. Operating expenses of $171.9 million decreased 7.4% year over year. Adjusted operating profit decreased 66.8% year over year to $3.2 million. The adjusted operating margin contracted 280 bps to 1.6%. Inspire Medical exited the second quarter of 2026 with cash and cash equivalents and short-term investments of $320.7 million compared with $399.7 million at the end of first-quarter 2026. Cumulative net cash provided by operating activities at the end of second-quarter 2026 was $36.1 million, compared with the cumulative net cash used in operating activities of $4 million a year ago. Inspire Medical has updated its revenue and EPS outlook for 2026. The company raised its revenue guidance to $835 million-$875 million from the previously projected $825 million-$875 million. The Zacks Consensus Estimate is pegged at $844.2 million. INSP now expects adjusted EPS for 2026 in the range of $1.05-$1.45, up from the prior guidance of $0.75-$1.25. The company projects an adjusted operating margin of 4-6%. The Zacks Consensus Estimate is pegged at 93 cents. Inspire Medical Systems, Inc. price-consensus-eps-surprise-chart | Inspire Medical Systems, Inc. Quote Inspire Medical exited the second quarter of 2026 with better-than-expected results. Although revenues declined year over year, disciplined spending, an improved product mix and gross margin expansion supported profitability. The higher sales mix of Inspire V remained a key positive, helping gross margin expand despite lower revenues. However, coding and reimbursement disruption continued to weigh on U.S. procedure volumes. Management stated that these challenges, including the WISeR program, reduced second-quarter revenues by approximately $40 million. The previously announced C-codes are now in place and have been incorporated into WISeR across the six applicable states. Management expects the adverse impact from reimbursement-related issues to ease sequentially during the third and fourth quarters. The launch of Project Horizon is a notable development in this quarter. The initiative is expected to create approximately $30 million of annualized investment capacity through organizational streamlining and supply-chain optimization. Inspire Medical plans to redeploy these funds toward patient access, education and engagement programs aimed at supporting revenue growth. Looking ahead, the company remains focused on restoring procedure momentum and accelerating growth beyond 2026. Inspire Medical also submitted a revised application for a new Category I CPT code, which is scheduled for review in September. If approved, the code could take effect on Jan. 1, 2028. These efforts should help improve procedure momentum and support a return to stronger growth beyond 2026. Inspire Medical currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the broader medical space are West Pharmaceutical WST, McKesson MCK and Cardinal Health CAH, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. West Pharmaceutical reported second-quarter 2026 adjusted earnings per share (EPS) of $2.37, which beat the Zacks Consensus Estimate by 13.9%. Revenues of $872.3 million surpassed the Zacks Consensus Estimate by 4.2%. West Pharmaceutical has an estimated long-term earnings growth rate of 16%. WST’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.4%. McKesson reported a fourth-quarter fiscal 2026 adjusted EPS of $11.69, which beat the Zacks Consensus Estimate by 1.1%. Revenues of $96.3 billion missed the Zacks Consensus Estimate by 5.5%. McKesson has an estimated long-term earnings growth rate of 13.7%. MCK’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.1%. Cardinal Health reported a third-quarter fiscal 2026 adjusted EPS of $3.17, which beat the Zacks Consensus Estimate by 13.2%. Revenues of $60.94 billion missed the Zacks Consensus Estimate by 2.3%. Cardinal Health has an estimated long-term earnings growth rate of 17%. CAH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 10.3%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Inspire Medical Systems, Inc. (INSP) : Free Stock Analysis Report Cardinal Health, Inc. (CAH) : Free Stock Analysis Report McKesson Corporation (MCK) : Free Stock Analysis Report West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Inspire Medical Systems, Inc.? Here are five stocks we like better. Second-quarter revenue fell 7.6% to $200.6 million as coding and reimbursement disruptions reduced procedure volumes by approximately $40 million; adjusted EPS was $0.14 and adjusted EBITDA margin was 19.4%. Despite the revenue decline, stronger profitability and cash flow led Inspire to raise its 2026 outlook to $835 million–$875 million in revenue, with adjusted diluted EPS of $1.05–$1.45. The company ended the quarter with $415 million in cash and investments and no debt. Inspire launched Project Horizon to generate about $30 million in annualized capacity for growth investments, while expecting $20 million–$25 million in pretax restructuring charges, mostly in the third quarter. Management expects reimbursement pressures to ease in the second half of 2026. 3 Medical Device Stocks Giving Investors a Different Healthcare Play Inspire Medical Systems (NYSE:INSP) reported second-quarter revenue of $200.6 million, down 7.6% from a year earlier, as coding and reimbursement disruptions continued to affect procedure volumes. The company said results exceeded its internal expectations for profitability and cash flow, prompting it to raise its full-year outlook for revenue, adjusted operating margin and adjusted earnings per share. Chairman and Chief Executive Officer Tim Herbert said the company has been working with customers to navigate changes in coding and billing for its Inspire V sleep apnea therapy system. He said improved trends in prior-authorization submissions and customer education efforts have provided greater confidence that the disruption will lessen during the second half of 2026. → Lost in Space: Why Aerospace Valuations Are Plummeting Right Now Eli Lilly Stock Up: GLP-1 Zepbound Targets Sleep Apnea Market Chief Financial Officer Matt Osberg said the revenue decline primarily reflected coding and reimbursement disruption, including the effect of declining prior authorizations observed during the first quarter. Diluted earnings per share were $0.01, while adjusted diluted EPS was $0.14. Adjusted EBITDA margin declined 90 basis points to 19.4%. Operating cash flow totaled $23.2 million during the quarter and $36.1 million for the first six months of the year, an improvement of $40 million from the prior-year six-month period, which Osberg attributed primarily to improved working capital. Inspire ended the quarter with $415 million in cash and investments and no debt. → MarketBeat Week in Review – 07/27- 07/31 Inspire Medical Up 15% After Breakout, Analysts Say It's A Buy The company revised its 2026 revenue outlook to a range of $835 million to $875 million. It now expects adjusted operating margin of 4% to 6%, diluted EPS ranging from a loss of $0.42 to earnings of $0.17, and adjusted diluted EPS of $1.05 to $1.45. For the third quarter, Inspire forecast an 8% to 10% year-over-year revenue decline, while expecting sequential revenue growth from the second quarter. Osberg said the company expects approximately breakeven adjusted operating income in the third quarter, as higher revenue is expected to be offset by a sequential increase in marketing expenses. → GE HealthCare Stock Climbs on Vital Diagnostics Demand Management estimated that coding and reimbursement issues, including the WISER program, reduced second-quarter results by about $40 million. For the full year, the company estimates a total adverse effect of $120 million to $130 million, with the impact expected to decline sequentially in the third and fourth quarters. Herbert said previously announced C-codes are now in place and have been incorporated into the WISER system for the six applicable states. Hospital and ambulatory surgery center reimbursement rates have remained unchanged, he said. For physician reimbursement, most Medicare Administrative Contractors do not require a -52 modifier for Inspire V procedures billed under CPT code 64582. Two contractors require the modifier, however, and payment reductions in those regions have ranged from 0% to 30% of the national average Medicare payment of $723, according to Herbert. He said surgeons that submit supporting documentation describing the reduction in services have generally been able to minimize reimbursement reductions. Inspire has focused its customer education efforts first on higher-volume centers, which management said account for a disproportionate share of revenue. The company is working through the majority of its top 25% of centers and expects to educate most of those facilities during the third quarter. CMS has proposed 2027 outpatient reimbursement of $35,414 for Inspire V procedures, about 12% above 2026 levels, and ambulatory surgery center reimbursement of $31,722, about 15% higher. CMS also proposed physician reimbursement of roughly $699 for CPT code 64582, a decline of about 4%. Herbert said the company is not assuming those levels will take effect until final rates are published in November. Inspire also submitted a revised application for a Category 1 CPT code for a single-lead Inspire system. The application, scheduled for review at the September AMA CPT Editorial Panel meeting, includes revised replacement-procedure subcodes, joint submission with another industry participant and additional clinical evidence. If approved, management said the code could remain on track for implementation Jan. 1, 2028. The company introduced Project Horizon, a strategic plan intended to create approximately $30 million in annualized capacity for growth investments. The initiative includes organizational changes and supply-chain consolidation intended to support quality, scale and efficiency. Osberg said Inspire expects to incur $20 million to $25 million of pretax restructuring charges, about 90% of which are expected to be recognized in the third quarter. Roughly $16 million to $20 million is expected to consist of non-cash impairment charges tied to production equipment at vendors that will no longer be used as the company consolidates its supply chain. The remaining charges relate to employee separation costs. Management expects most restructuring actions to be completed in the third quarter and substantially all actions to be complete by year-end. Herbert said the majority of redeployed investments will target patient flow and are expected to have a greater effect in 2027 and beyond. Expanding patient access to care and helping patients navigate coverage approval. Increasing patient education and engagement through the Inspire Connect program. Building on prior-authorization support tools within the SleepSync platform. Expanding capacity through additional centers and surgeons. Herbert said Inspire maintained 280 territories and increased the number of field clinical representative areas to 301. Inspire V represented the large majority of implants in the second quarter, although some centers continue to use Inspire IV for certain Medicare cases. At the American Academy of Sleep Medicine conference in June, Inspire presented full results from its Inspire V trial in Singapore, including data on the safety and efficacy of the implant and its accelerometer-based sensing technology. Herbert also cited a secondary analysis of the STAR trial showing reductions in hypoxic burden, a measure incorporating the depth, duration and frequency of oxygen desaturation events during sleep. Separately, he highlighted a TriNetX database analysis matching 3,525 hypoglossal nerve stimulation patients with 3,525 CPAP patients. The analysis found lower odds in the hypoglossal nerve stimulation group for several outcomes, including stroke, myocardial infarction, atrial fibrillation, hospitalization and acute heart failure. The company also announced publication of the PREDICTOR study, which identified body mass index and neck circumference as predictors of complete concentric collapse. Herbert said the findings could allow some potential patients to be screened for eligibility without drug-induced sleep endoscopy, potentially reducing diagnostic burden and time to treatment. Management said it continues to track GLP-1 adoption but does not believe the drugs have changed overall demand for Inspire therapy. Herbert said the company views GLP-1 medicines as potentially helping some patients lose weight and become eligible for Inspire treatment over the longer term. Inspire Medical Systems, Inc is a medical technology company specializing in implantable neurostimulation devices for the treatment of obstructive sleep apnea (OSA). The company's flagship offering, the Inspire® system, delivers targeted stimulation of the hypoglossal nerve to maintain airway patency during sleep, providing an alternative therapy for patients who are intolerant of or inadequately managed by continuous positive airway pressure (CPAP) devices. The Inspire system comprises an implantable pulse generator, a sensing lead that monitors breathing patterns, and a stimulation lead that activates the hypoglossal nerve. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Inspire Medical Systems Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Inspire Medical Systems (INSP) came out with quarterly earnings of $0.14 per share, beating the Zacks Consensus Estimate of a loss of $0.22 per share. This compares to earnings of $0.45 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +163.64%. A quarter ago, it was expected that this maker of devices for treating obstructive sleep apnea would post a loss of $0.36 per share when it actually produced earnings of $0.1, delivering a surprise of +127.78%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Inspire, which belongs to the Zacks Medical Info Systems industry, posted revenues of $200.58 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 2.95%. This compares to year-ago revenues of $217.09 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Inspire shares have lost about 45.6% since the beginning of the year versus the S&P 500's gain of 9.4%. While Inspire has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Inspire was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.21 on $203.81 million in revenues for the coming quarter and $0.93 on $844.21 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical Info Systems is currently in the top 33% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Privia Health (PRVA), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 6. This physician practice management company is expected to post quarterly earnings of $0.08 per share in its upcoming report, which represents a year-over-year change of +300%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Privia Health's revenues are expected to be $581.67 million, up 11.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Inspire Medical Systems, Inc. (INSP) : Free Stock Analysis Report Privia Health Group, Inc. (PRVA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Generated second quarter revenue of $200.6 million Second quarter diluted EPS of $0.01; adjusted diluted EPS of $0.14 Second quarter operating cash flow of $23.2 million Announced strategic growth plan designed to unlock and redeploy $30 million for growth initiatives MINNEAPOLIS, Aug. 03, 2026 (GLOBE NEWSWIRE) -- Inspire Medical Systems, Inc. (NYSE: INSP) (Inspire, or the Company), a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea, today reported financial results for the quarter ended June 30, 2026. “Our second quarter results reflect the increased discipline and focus we are bringing to the business as we continue to support customers through the evolving coding and reimbursement environment and invest in the long-term adoption of Inspire therapy,” said Tim Herbert, Chairman and CEO of Inspire Medical Systems. “We are also announcing a strategic growth plan designed to generate approximately $30 million of annualized growth investment capacity, which we intend to redeploy into targeted growth initiatives. We believe these actions will strengthen our operating foundation, sharpen our focus on the highest-return opportunities, and position Inspire for sustainable growth and long-term value creation.” Second Quarter 2026 Financial Results (Second Quarter 2026 compared to Second Quarter 2025) Revenue decreased 7.6% to $200.6 million, primarily driven by a decline in U.S. revenue, partially offset by growth in International revenue. The U.S. decline was driven primarily by the impacts of evolving coding and reimbursement environment. Gross margin increased 150 bps to 85.5%, primarily due to increased sales mix of the Inspire V system, which has a higher gross margin than the Inspire IV system. Operating expenses decreased $13.8 million, or 7.4%, to $172.0 million, primarily driven by lower stock-based compensation costs due to accelerated stock-based compensation expenses recognized in the prior year period as well as lower marketing expenses. Operating earnings increased $2.8 million to an operating loss of $0.5 million, and operating margin of (0.3)%. Adjusted operating income was $3.2 million, and adjusted operating margin was 1.6%. Interest and dividend income, net decreased by $0.7 million, primarily due to lower average interest rates and lower average cash, cash equivalents, and investment balances. Other expense, net decreased by $3.4 million, primarily due to a $4.0 million impairment charge recognized in the prior year period, partially offset by a decrease in interest and dividend income in the current period due to lower average interest rates and lower average cash, cash equivalents, and investment balances in the current period. The effective tax rate was 89.9% compared to (54.0)%. The increase in the effective tax rate was primarily driven by tax shortfall related to stock-based compensation. For the three months ended June 30, 2025, the Company maintained a full valuation allowance against federal and state deferred tax assets, which was subsequently released at December 31, 2025. Net earnings was $0.3 million and adjusted net earnings was $4.0 million. Diluted EPS was $0.01 and adjusted diluted EPS was $0.14. Financial Condition Net cash provided by operating activities for the three months ended June 30, 2026 was $23.2 million, compared to $2.7 million in the prior year period. The change was primarily driven by improved working capital, primarily in receivables and inventories. As of June 30, 2026, cash, cash equivalents, and investments increased $10.6 million to $415.2 million as compared to December 31, 2025. Full Year 2026 Guidance The Company is raising its previously announced revenue outlook to be in the range of $835 million to $875 million. Additionally, the Company now expects annual adjusted operating margin to be in the range of 4% to 6%, diluted EPS to be in the range of $(0.42) to $0.17 and adjusted diluted EPS to be in the range of $1.05 to $1.45. The Company’s outlook assumes an effective tax rate of approximately 95% to 100% and an adjusted effective tax rate of 30% to 35%, estimated weighted average diluted shares outstanding of approximately 29.4 million, and capital expenditures between $35 million to $40 million. Strategic Growth Plan On August 3, 2026, the Company announced a strategic growth plan, named Project Horizon, intended to create additional investment capacity to accelerate revenue growth through: Aligning resources to revenue growth initiatives; Streamlining the organization; and Optimizing the Company’s supply chain by consolidating production to support quality, scale, and efficiency. The Company expects to incur a total of $20 million to $25 million of pre-tax restructuring charges in connection with the first phase of Project Horizon, including approximately $4 million to $5 million of employee-related costs, and $16 million to $20 million of other expenses, which will be non-cash in nature. These actions are expected to generate approximately $30 million of annualized growth investment capacity which is expected to be invested in revenue growth initiatives. The Company expects the majority of actions related to the restructuring to be completed in the third quarter and all actions to be substantially complete by the end of 2026. Webcast and Conference Call The Company's management will host a conference call after market close today, Monday, August 3, 2026, at 5:00 p.m. Eastern Time to discuss these results and answer questions. To access the conference call, please preregister on https://register-conf.media-server.com/register/BI05401f2d26b24d47a1416936675b79be. Registrants will receive confirmation with dial-in details. A live webcast of the event can be accessed on https://edge.media-server.com/mmc/p/qu4ekmuy/. A replay of the webcast will be available on https://investors.inspiresleep.com starting approximately two hours after the event and archived on the site for two weeks. About Inspire Medical Systems Inspire Medical Systems is a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea. Inspire’s proprietary Inspire therapy is the first FDA, EU MDR, and PDMA-approved neurostimulation technology that provides a safe and effective treatment for moderate to severe obstructive sleep apnea. For additional information about Inspire, please visit www.inspiresleep.com. Use of Non-GAAP Financial Measures This press release includes non-GAAP financial measures, including without limitation, adjusted operating income, adjusted operating margin, adjusted earnings before income taxes, adjusted income tax expense, adjusted effective tax rate, adjusted net earnings, adjusted net earnings per diluted share ("EPS"), adjusted EBITDA, and adjusted EBITDA margin, which differ from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). We define adjusted operating income as operating income or loss adjusted for items that are not indicative of our ongoing operations. Operating income is the most directly comparable GAAP financial measure to adjusted operating income. We define adjusted operating margin in this release as adjusted operating income divided by revenue. Operating margin is the most directly comparable GAAP financial measure to adjusted operating margin. Adjusted earnings before income taxes is defined as earnings before income taxes, adjusted for items that are not indicative of our ongoing operations. Earnings before income taxes is the most directly comparable GAAP financial measure. Adjusted income tax expense is defined as income tax expense, adjusted for items that are not indicative of our ongoing operations. Adjusted effective tax rate is adjusted income tax expense divided by adjusted earnings before income taxes. Income tax expense is the most directly comparable GAAP financial measure. Adjusted net earnings is defined as net earnings or loss, adjusted for items that are not indicative of our ongoing operations. Net earnings or loss is the most directly comparable GAAP financial measure to adjusted net earnings. Adjusted net earnings per diluted share is calculated as adjusted net earnings divided by the diluted weighted average shares outstanding. Net earnings or loss per diluted share is the most directly comparable GAAP financial measure to adjusted net earnings per diluted share. We define adjusted EBITDA as net earnings or loss, less interest and dividend income, net, plus income tax expense, plus depreciation and amortization, plus stock-based compensation expense, adjusted for items that are not indicative of our ongoing operations. Net earnings or loss is the most directly comparable GAAP financial measure to adjusted EBITDA. We define adjusted EBITDA margin in this release as adjusted EBITDA divided by revenue. Net earnings or loss margin is the most directly comparable GAAP measure to adjusted EBITDA margin. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures are included in this press release. These non-GAAP financial measures are presented because we believe they are useful indicators of our operating performance and facilitate a more meaningful trend analysis without the distortion of various adjustment items. Management uses these measures principally as measures of our underlying operating performance, trends, and for planning purposes, including the preparation of our annual operating plan and financial projections. We believe these measures are useful to investors as supplemental information and because they are frequently used by analysts, investors, and other interested parties to evaluate companies in our industry. We also believe these non-GAAP financial measures are useful to our management and investors as a measure of comparative operating performance from period to period. These non-GAAP financial measures should not be considered as an alternative to, or superior to, the most directly comparable GAAP financial measures, as measures of financial performance or cash flows from operations, as a measure of liquidity, or any other performance measure derived in accordance with GAAP, and they should not be construed to imply that our future results will be unaffected by unusual or non-recurring items. In addition, Adjusted EBITDA is not intended to be a measure of cash flow for management’s discretionary use, as it does not reflect certain cash requirements such as tax payments, capital expenditures, and certain other cash costs that may recur in the future. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs, and cash costs to replace assets being depreciated and amortized. In evaluating our non-GAAP financial measures, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of non-GAAP financial measures should not be construed to imply that our future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on our GAAP results in addition to using non-GAAP financial measures on a supplemental basis. These measures and their definitions are discussed in more detail below and our definition of these non-GAAP financial measures is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation. Forward Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are forward-looking statements, including, without limitation, statements regarding estimated financial and non-financial impacts from our strategic growth plan (including without limitation the expectations for pre-tax charges in connection with the growth plan, annual growth investment capacity, the extent and manner of the use of investments in revenue growth initiatives as well as the time to complete the strategic growth plan) and potential impacts to our business (including potential actions and solutions as well as timing of these impacts) associated with coding and reimbursement, and our expectations regarding our full year 2026 financial outlook (including without limitation expectations for the impacts of coding and reimbursement, revenue, expected growth, adjusted operating margin, net earnings or loss per diluted share, adjusted net earnings per diluted share, effective tax rate, adjusted effective tax rate, weighted average diluted shares outstanding and capital expenditures). In some cases, you can identify forward-looking statements by terms such as ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘expect,’’ ‘‘plan,’’ ‘‘anticipate,’’ ‘‘could,’’ “future,” “outlook,” “guidance,” ‘‘intend,’’ ‘‘target,’’ ‘‘project,’’ ‘‘contemplate,’’ ‘‘believe,’’ ‘‘estimate,’’ ‘‘predict,’’ ‘‘potential,’’ ‘‘continue,’’ or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. These forward-looking statements are based on management’s current expectations and involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others: our dependency on our Inspire system for revenues; fluctuations in our financial results and the market price of our common stock; our ability to sustain or increase our profitability and our history of operating losses; commercial success and market acceptance of our Inspire therapy; our ability to achieve and maintain adequate and clear levels of coverage or reimbursement for our Inspire system or any future products we may seek to commercialize; competitive companies, technologies, and pharmaceuticals in our industry; our ability to expand our indications and develop and commercialize additional products and enhancements to our Inspire system; our ability to forecast demand and manage our inventory; our dependence on third-parties; risks related to consolidation in the healthcare industry; our ability to expand, manage, and maintain our direct sales and marketing organization, and to market and sell our Inspire system in markets outside of the United States; our ability to manage our growth; risks related to product liability claims and warranty claims; our ability to address quality issues that may arise with our Inspire system; any failure of key information technology systems, processes, or sites or damage to or inability to access our physical facilities; any violations of anti-bribery, anti-corruption, and anti-money laundering laws; future needs for additional financing; risks related to our tax assets and changes in tax laws; our ability to timely commercialize or obtain regulatory approvals or certifications for our Inspire therapy and system; U.S. Food and Drug Administration (FDA) or other United States or foreign regulatory actions affecting us or the healthcare industry generally; our ability to establish and maintain intellectual property protection for our Inspire therapy and system or avoid claims of infringement; and our strategic growth plan may not achieve our intended outcome. Other important factors that could cause actual results, performance or achievements to differ materially from those contemplated in this press release can be found under the captions “Risk Factors” and "Management's Discussion and Analysis of Financial Condition and Results of Operations“ in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and as such factors may be updated from time to time in our other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov and the Investors page of our website at www.inspiresleep.com. These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, unless required by applicable law, we disclaim any obligation to do so, even if subsequent events cause our views to change. Thus, one should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. These forward-looking statements should not be relied upon as representing our views as of any date after the date of this press release. Investor & Media ContactEzgi YagciVice President, Investor [email protected] 617-549-2443 1 These costs represent legal-related expenses related to (a) a civil investigative demand from the Department of Justice, (b) a patent infringement suit that we filed against Nyxoah S.A. and its wholly-owned subsidiary, Nyxoah, Inc. ("Nyxoah"), and (c) a patent infringement suit brought against us by Nyxoah.2 The accounting standards codification guidance governing employee stock-based compensation requires that any excess or deficient tax deduction for stock-based compensation be immediately recorded within income tax expense. Employee stock-based compensation activity, including the exercise of stock options, can be unpredictable and can significantly impact our net earnings, net earnings per diluted share, and effective tax rate. These amounts represent the discrete tax expense recorded as excess tax expense for stock-based compensation.3 Represents accelerated stock-based compensation expense for certain employees who were retirement eligible in accordance with the implementation of changes to the treatment of equity awards under the Inspire Medical Systems, Inc. 2018 Incentive Award Plan upon the holder's death, disability, or retirement.4 Represents a non-cash impairment of a strategic investment. 1 These costs represent legal-related expenses related to (a) a civil investigative demand from the Department of Justice, (b) a patent infringement suit that we filed against Nyxoah S.A. and its wholly-owned subsidiary, Nyxoah, Inc. ("Nyxoah"), and (c) a patent infringement suit brought against us by Nyxoah.2 The accounting standards codification guidance governing employee stock-based compensation requires that any excess or deficient tax deduction for stock-based compensation be immediately recorded within income tax expense. Employee stock-based compensation activity, including the exercise of stock options, can be unpredictable and can significantly impact our net earnings, net earnings per diluted share, and effective tax rate. These amounts represent the discrete tax expense recorded as excess tax expense for stock-based compensation.3 Represents accelerated stock-based compensation expense for certain employees who were retirement eligible in accordance with the implementation of changes to the treatment of equity awards under the Inspire Medical Systems, Inc. 2018 Incentive Award Plan upon the holder's death, disability, or retirement.4 Represents a non-cash impairment of a strategic investment. 1 Total stock-based compensation expense.2 These costs represent legal-related expenses related to (a) a civil investigative demand from the Department of Justice, (b) a patent infringement suit that we filed against Nyxoah S.A. and its wholly-owned subsidiary, Nyxoah, Inc. ("Nyxoah"), and (c) a patent infringement suit brought against us by Nyxoah.3 Represents a non-cash impairment of a strategic investment. 1 Net earnings (loss) margin is calculated as net earnings (loss) divided by total revenue.2 Total stock-based compensation expense.3 These costs represent legal-related expenses related to (a) a civil investigative demand from the Department of Justice, (b) a patent infringement suit that we filed against Nyxoah S.A. and its wholly-owned subsidiary, Nyxoah, Inc. ("Nyxoah"), and (c) a patent infringement suit brought against us by Nyxoah.4 Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by total revenue. 1 These costs represent legal-related expenses related to (a) a civil investigative demand from the Department of Justice, (b) a patent infringement suit that we filed against Nyxoah S.A. and its wholly-owned subsidiary, Nyxoah, Inc. ("Nyxoah"), and (c) a patent infringement suit brought against us by Nyxoah.2 Restructuring costs related to Project Horizon.3 Represents the estimated tax impact of permanent differences that arise between the expense recognized for financial reporting of stock-based compensation awards and the tax deduction the Company receives (tax windfall or shortfall). Accounting standards codification guidance requires that any excess or deficient tax deduction for stock-based compensation be immediately recorded within income tax expense. These amounts represent the estimated discrete tax impact for stock-based compensation during the period presented.