Inspire Medical: EPS exceeds Q3 forecast

Specialist in sleep apnea Inspire medical systems (INSP 1.05%) reported third-quarter earnings on Monday, November 4, which topped analyst consensus estimates. Earnings per share (EPS) came in at $0.60, significantly better than analyst expectations of $0.06. Revenue was $203.2 million, exceeding expectations of $197.6 million and representing a substantial increase of 33% from the previous year.

Overall, the quarter showed strong growth, driven by strategic expansion and market penetration.

Source: Inspire Medical Systems. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year after year.

Business overview and key factors

Inspire Medical Systems is focused on providing innovative, FDA-cleared solutions for obstructive sleep apnea (OSA). Its lead product, a minimally invasive neurostimulation system, is the only one of its kind approved and used as an alternative to conventional continuous positive airway pressure (CPAP) therapies. The technology’s market advantage comes from its uniqueness and robust clinical support, essential for achieving insurance reimbursement and broad patient acceptance.

The company’s growth strategy revolves around expanding its market presence, increasing awareness among potential patients and healthcare providers, and strengthening reimbursement policies. These efforts have resulted in significant revenue growth, highlighting Inspire Medical Systems’ focus on long-term sustainable expansion and innovation.

Highlights of the quarter

Inspire Medical Systems’ 33% year-over-year sales increase saw contributions from both the US and international markets. US sales grew 33%, consolidating market presence with 66 new centers. Meanwhile, international revenues increased by 27%, reflecting significant global growth.

Operating income improved significantly, reaching $14.3 million, compared to a loss last year. This shift is attributed to improved operational efficiency and cost management. Gross margins remained stable at 84.1%, demonstrating effective cost control despite a 10% increase in operating costs due to the company’s strategic expansion initiatives.

FDA approval of the Inspire V neurostimulation system underlines the company’s commitment to innovation. The adoption of the system supports regulatory compliance and strengthens competitive advantage.

Future perspective

In terms of financial expectations, the company’s management has raised its full-year revenue estimate to between $793 million and $798 million (27.5% growth at the midpoint) and EPS guidance to $1.20 to $1.40 ( an increase from previous expectations of $0.60 to $0.80), reflecting confidence. in its growth trajectory. The outlook assumes sustainable growth and profitability. The company plans to further expand its market presence with new centers and sales areas, underscoring the potential for sustainable sales growth.

Investors and analysts should keep an eye on Inspire Medical Systems’ management of operating costs, as well as Inspire Medical Systems’ strategic approaches to managing reimbursement complexity. As the company moves forward with its comprehensive neurostimulation system, monitoring the execution of go-to-market strategies and innovations will be critical to evaluating continued performance and adoption rates in the coming quarters.