Inspire Medical Systems, Inc. Q4 FY2024 earnings call

· 2024 was marked by milestones such as surpassing 90,000 patients treated with Inspire therapy, exceeding 350 peer-reviewed publications, FDA approval of Inspire V neurostimulator, EU medical device regulation approval with full body MRI compatibility, country-wide reimbursement in France, and the first full year of profitability. · Organizational changes included hiring Jason Kelly as Chief Manufacturing and Quality Officer, promoting Carlton Weatherby to Chief Strategy and Growth Officer, and Randy Ban taking on new roles. · Inspire V device features respiratory sensing and future software enhancements, with limited market release in the U.S. · SleepSync programming system fully launched in the U.S., reducing operational complexities. · Medical education programs hosted over 300 advanced practice providers, 300 ENT residents, and 150 sleep fellows in 2024, with plans to expand in 2025. · Patient marketing and education programs focused on targeted outreach, including digital advertising to increase patient engagement.

For the full year 2024, total revenue was $802.8 million. U.S. revenue accounted for $771 million, which is 96% of the total, and revenue outside the U.S. was $31.8 million, making up 4% of the total. In the fourth quarter of 2024, revenue was $239.7 million. U.S. revenue in the fourth quarter was $231.6 million (97% of the quarter's total), and outside U.S. revenue was $8.1 million (3% of the quarter's total).

· Full year 2025 revenue guidance is $940 million to $955 million, representing 17% to 19% growth year-over-year. · Full year 2025 diluted net income per share is expected to be between $2.10 and $2.20. · Full year gross margin is expected to be in the range of 84% to 86%. · Tax rate in 2025 is expected to be roughly 10% primarily related to state and local taxes. · Diluted shares outstanding are expected to be approximately 31 million excluding share repurchases.

· DOJ civil investigative demand related to marketing, promotion, and reimbursement practices associated with products. · Potential impact of market competition on market share and revenue. · Delays in the full launch of Inspire V due to inventory or production issues, which could affect revenue growth. · Changes in payer policies regarding reimbursement for Inspire therapy, which could impact financial performance.

Q: Travis Steed asked about the EPS guidance and the DOJ CID.

A: Rick Buchholz mentioned commitment to improving annual operating margin with sequential improvement in revenue thereafter, and Tim Herbert stated the DOJ CID is new, ongoing, and they are committed to cooperating ethically.

Q: Danielle Antalffy asked about growth at centers with automated scheduling and Inspire V reimbursement.

A: Tim Herbert said digital scheduling streamlined patient appointment process with 300 centers using it, and on Inspire V reimbursement, he stated it's not a barrier as it reduces surgeon work and allows more cases.

Q: Robbie Marcus asked about phasing of Inspire V launch and EPS.

A: Rick Buchholz said comfortable with Q1 estimates, expecting sequential revenue growth throughout the year with investments in business.

Q: Chris Pasquale asked about Inspire V launch impact on gross margin.

A: Rick Buchholz said no near-term negative impact, gross margin guidance includes tailwind from Inspire V.

Q: Anthony Petrone asked about number of U.S. centers with Inspire V and cases per day.

A: Tim Herbert said Singapore started earlier, ramping up limited market release in U.S. with limiting factor being product building.

Q: Richard Newitter asked about first half vs second half weighting and center utilization.

A: Rick Buchholz said comfortable with Q1, expecting sequential revenue growth, and no specific utilization guidance but expanding footprint.

Q: David Rescott asked about international revenue and interest income.

A: Rick Buchholz said international revenue trends at 3%-4% of worldwide, interest income expected to be $20 million annually.

Q: Adam Maeder asked about Gen 5 and competition.

A: Tim Herbert said working with ENTs to build efficiencies, and prepared for competition.

Q: Larry Biegelsen asked about competition and patient warehousing.

A: Tim Herbert said monitoring competition, limited patient warehousing expected.

Q: Shagun Singh asked about DOJ investigation scope and guidance.

A: Tim Herbert said early stages, guiding based on detailed plan including center expansion and investments.

Q: Brett Fishbin asked about Inspire V inventory and production.

A: Tim Herbert said scaling new production line for Inspire V, building inventory.

Q: Jon Block asked about UnitedHealthcare coverage changes and competition.

A: Tim Herbert said working with United to clarify coverage, monitoring competition.

Q: Michael Polark asked about center base longer-term view.

A: Tim Herbert said continuing to expand centers, focusing on national contracts and ASCs.

Q: Mike Kratky asked about ASC adoption and impact.

A: Tim Herbert said new coding change helps ASC adoption by increasing reimbursement.

Q: Suraj Kalia asked about patients not trying CPAP.

A: Tim Herbert said very few patients have not tried CPAP as it's a strict requirement.