Inspire Medical Systems, Inc. Q4 FY2025 earnings call

• Reimbursement Update: Clarification on Inspire 5 procedure coding, transitioning to CPT code 64582 with a -52 modifier; estimated professional fee reduction ranges from 10% to 50%.
• Fourth Quarter and Full Year Results: Strong revenue growth, operating margin improvement due to sales leverage and higher sales mix of Inspire 5 systems; tax benefit from release of income tax valuation allowance.
• Inspire 5 Performance: Demonstrated superiority over Inspire 4 in surgical time, inspiratory overlap, and AHI responder rate; device reliability improved with low explant and revision rates.
• U.S. Launch Progress: Physician training complete, contracting over 95% complete for centers, SleepSync onboarding over 90%.
• R&D Initiatives: Testing prior authorization feature in SleepSync, FDA approval for 3 Tesla MRI compatibility; development of Inspire 6 with sleep detection and auto activation.
• Territory Management: Strategic territory consolidation, increased field clinical reps to optimize model.
• WISER Program: Impact on Medicare cases in pilot states, with denials due to medical criteria and coding issues.

Fourth quarter revenue increased 12% to $269 million, and full year revenue increased 14% to $912 million. Revenue growth was primarily driven by growth at existing centers and new center additions. No specific breakdown of product segments by revenue contribution % was provided beyond the overall revenue figures.

• 2026 revenue guidance revised to $950 million to $1,000 million (4%-10% growth), reflecting coding uncertainty and physician reimbursement rates.
• Adjusted operating margin expected 6%-8%, net income per diluted share $1.23-$1.81, adjusted net income per diluted share $1.85-$2.35.
• First quarter 2026 revenue expected flat to prior year, net loss expected; sequential improvement anticipated later in the year.

• Coding/Reimbursement Uncertainties: Variability in professional fee reduction with -52 modifier; impact of WISER program on Medicare cases.
• Competition: Potential impact from other companies' coding and market strategies.
• Stock-Based Compensation Tax Impact: Volatility in stock price affecting effective tax rate.

Q: Adam Maeder from Piper Sandler on reimbursement clarity for Inspire 5 code.

A: Timothy P. Herbert on working with MACs and commercial payers to minimize fee reduction, and working towards a new Category I CPT code.

Q: Jonathan David Block from Stifel on 2026 revenue guidance revision.

A: Timothy P. Herbert on WISER program impact and coding uncertainty contributing to the guidance range.

Q: Robert Justin Marcus from JPMorgan on pathway to new code and competition.

A: Timothy P. Herbert on new code application process and confidence in Inspire 5's market position despite competition.

Q: Danielle Joy Antalffy from UBS on patient funnel and physician reimbursement impact.

A: Timothy P. Herbert on focusing on centers with salary-based surgeons and strong clinical data to manage patient flow.

Q: Michael Kratky from Leerink Partners on claims rejection rates for Inspire 5 procedures.

A: Timothy P. Herbert on variability in claims payment and importance of coding clarity for reimbursement consistency