Inspire Medical Systems’ second quarter results were marked by operational challenges tied to the commercial rollout of its Inspire V system, with management attributing slower-than-expected transitions at implanting centers and delayed Medicare billing as primary headwinds. CEO Tim Herbert described these issues as “the predominant drivers,” citing slower onboarding of SleepSync and delays in Medicare software updates. Although early feedback on Inspire V was positive, these rollout frictions contributed to a cautious tone from management, as well as a significant negative market reaction to the quarter’s results.
Is now the time to buy INSP? Find out in our full research report (it’s free).
Inspire Medical Systems (INSP) Q2 CY2025 Highlights:
- Revenue: $217.1 million vs analyst estimates of $214.4 million (10.8% year-on-year growth, 1.2% beat)
- EPS (GAAP): -$0.12 vs analyst estimates of $0.20 (significant miss)
- Adjusted EBITDA: $44.11 million vs analyst estimates of $36.38 million (20.3% margin, 21.2% beat)
- The company dropped its revenue guidance for the full year to $905 million at the midpoint from $947.5 million, a 4.5% decrease
- EPS (GAAP) guidance for the full year is $0.45 at the midpoint, missing analyst estimates by 80.1%
- Operating Margin: -1.5%, down from 2.6% in the same quarter last year
- Sales Volumes rose 16% year on year (25.9% in the same quarter last year)
- Market Capitalization: $2.48 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are 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.
Our Top 5 Analyst Questions From Inspire Medical Systems’s Q2 Earnings Call
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Adam Carl Maeder (Piper Sandler) questioned the ranking of headwinds behind the guidance cut. CEO Tim Herbert clarified that delays in SleepSync onboarding and Medicare billing were the primary drivers, with other factors like patient preferences and inventory less significant.
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Travis Lee Steed (Bank of America Securities) pressed for details on the large drop in EPS guidance. CFO Rick Buchholz explained the reduction was mainly due to lower revenue guidance and increased marketing spending, with one-time charges included in the GAAP number.
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Danielle Joy Antalffy (UBS) asked how management could be confident that lower volumes are temporary, not structural. Herbert pointed to strong performance at Inspire V centers and anticipated improvements as rollout challenges are resolved.
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Robert Justin Marcus (JPMorgan) sought clarity on whether 2025’s lower growth was a one-off. Herbert indicated that management expects growth to accelerate in 2026 as Inspire V adoption normalizes and backlog is addressed.
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Shagun Singh Chadha (RBC) inquired about the confidence in the implied Q4 guidance step-up and whether profitability is a concern for customers. Herbert noted the seasonal pattern and positive reimbursement changes, while stating there’s been no significant pushback from providers.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be tracking (1) the rate at which additional centers transition to Inspire V and complete SleepSync onboarding, (2) the effectiveness of increased patient marketing and expansion efforts in rebuilding patient flow, and (3) tangible improvements in surgical capacity and throughput at transitioned centers. We will also watch for updates on Medicare reimbursement and the competitive landscape for sleep apnea treatments.
Inspire Medical Systems currently trades at $83.50, down from $130.41 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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