Release Date: November 04, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Inspire Medical Systems Inc (NYSE:INSP) reported a 33% increase in revenue for Q3 2024 compared to the same period in 2023, indicating strong business performance.

• The company has expanded its market presence by adding 66 new centers and 13 new U.S. sales territories, enhancing its reach and potential for growth.

• Inspire Medical Systems Inc (NYSE:INSP) has increased its 2024 revenue guidance to $793 to $798 million, reflecting confidence in continued growth.

• The company achieved a net income of $18.5 million in Q3 2024, a significant improvement from a net loss of $8.5 million in the prior year period.

• Inspire Medical Systems Inc (NYSE:INSP) is advancing its product development with the soft launch of the new Sleep Sync programming system and the upcoming launch of the Inspire 5 neurostimulation system, which is expected to improve patient management and reduce production costs.

Negative Points

• The company faces potential revenue headwinds in Q4 2024 due to hurricanes and an IV solution shortage, which could impact financial performance.

• Operating expenses increased by 10% in Q3 2024 compared to the same period in 2023, primarily due to sales organization expansion and increased corporate costs.

• There is uncertainty regarding the impact of GLP-1 drugs on the market, which could affect the demand for Inspire therapy.

• The company needs to navigate coding strategies for the Inspire 5 system to ensure reimbursement rates remain favorable for physicians.

• Inspire Medical Systems Inc (NYSE:INSP) is still working on quantifying the impact of regional disruptions, such as hurricanes, on its operations and revenue.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with INSP.

Q: Can you discuss the sustainability and trajectory of your margins, particularly in light of the recent profitability and EPS margin upside? A: (Rick, CFO) We aim to maintain consistency and leverage across our organization, not just in DTC spending but also in R&D and sales team performance. We've shown efficiencies in DTC, allowing us to create awareness and bring patients into the system more cost-effectively. R&D expenses were reduced due to some prelaunch inventory costs in the previous year, and we expect R&D to be in the mid to high teens going forward. We anticipate continued profitability on a year-over-year basis.

Q: How are you addressing the potential impacts of the IV fluids shortage and hurricanes on utilization and revenue? A: (Tim Herbert, CEO) It's difficult to quantify the impact at this time, but we anticipate some revenue headwinds in Q4 due to evacuation center closures and saline shortages. We're closely monitoring the situation and working to support affected staff and centers. We expect some regional impact but are doing our best to mitigate it.